
Class 



Book____i_h_i^ 



Gopightl^^. 



CQBOBiaia DSPGSI& 



BOTH 



PROTECTION 



FREE TRADE 



Articles from the most emine7tt Political 
Economists ajid Statesmen. 



EDITED BY 

H. W. FURBER. 



{ MA.v 3 1888 r 

BOSTON : ^-^-._:— -^ 

Boston Publishing Company. 



y, 



1888. 



^^^y 



i't 



WHICH? 

PROTECTION, FREE TRADE, 

OR 

TARIFF REFORM? 



THIS QUESTION ANSWERED BY 

Prof. BOWEN, of Harvard University, 

Prof. TAUSSIG, of Harvard University, 
Prof. CHAPIN, of Beloit College, 

Prof. THOMPSON, of University of Pa., 
Prof. PERRY, of Williams College, 
Prof. \A^ILSON, of Cornell University, 
Prof. SUMNER, of Yale University, 

Prof. BASCOM, of Wisconsin State University, 

Prof. FAWCETT, of Cambridge University, Eng., 
SMITH, CLAY, 

CAREY, GREELEY, 

BAIRD, GARFIELD, 

BLAINE, CARLISLE, 

BLANQUI, FRYE, 

BECK, HEWITT, 

LIST, WELLS, 

LINCOLN^: : 

And many others. 



WEBSTER, 



Copyright, 1888, by H. W. Furber. 



PREFACE 



The object of this work is to bring before the public a 
volume that contains the best things written both for and 
against Protection. In selecting the articles I have con- 
sulted the authors when possible, and am indebted to them 
for much assistance and many kind suggestions. 

One important object was to make an inexpensive work. 
^e felt that the masses were detained or discouraged from 
gaining important information on a great and vital National 
issue, because of the expense or trouble involved. We have 
therefore collected in this volume what would previously 
require the purchase of a library to obtain. 

H. W. FURBEE. 

E. NORTHWOOD, N. H. 



CONTENTS 



CHAPTER I. 

Page. 

International Trade; By Aaron L. Chapin, D.D. . 13 

CHAPTER II. ♦ 

Modern Political Economy ; By Adam Smith, LL.D., 

F.R.S . 25 

CHAPTER III. 

Effects op Regulations Prescribing the Nature op 

Products; By Jean-Baptiste Say. . . . 44 

CHAPTER IV. 
Speech op Henry Clay in Defense op the American 
System, in tlie Senate of tlie United States, February 3, 
3, and 6, 1832 62 

CHAPTER V. 

k Protection and Free Trade ; By John Stuart Mill. . 84 

CHAPTER VI. 

Speech op Horace Greeley on the Grounds op Pro- 
tection. ....... 100 

CHAPTER VII. 
Protecting Duties; By Francis Wayland, D.D., LL.D., 

President of Brown University. .... 124 

CHAPTER VIII. 
Failure op Revenue Tariff and Other Subjects; By 

Henry C. Carey. A letter addressed to President Grant. 132 

CHAPTER IX. 
^ The Fallacies of the Protective Theory; By Hon. 

Amasa Walker, LL.D., late lecturer in Amherst College. 143 



CONTENTS. 



CHAPTER X. 

The DocTRrs'E of Ixtekjs ationai, Exchanges : The Limits 
OF Free Trade and the Protectr^e System; By 



Page. 



Prof. Francis Bowen, Alford Professor of Natural 
Religion, Moral Pliilosophy, and Civil Polity, in Har- 
vard University. ...... 160 

CHAPTER XI. 

Free Trade; By Richard Cobden, M. P. . . . 180 

CHAPTER XII. 
Webster's Change op Yie^'s; Speech of Mr. Webster of 
Massachusetts, on the Tariff, in the Senate, July 25, 
and 27, 1846. 193 

CHAPTER XIII. 
Does Protection Protect ? Thomas G. Shearman, Esq. 203 

CHAPTER XIV. 
The Necessary Foundations op Individual and Na- 
tional, Well-being, and of Clv^ilization; By Henry 
Carey Baird. ...... 231 

CHAPTER XV. 

Protection ant) Free Trade; By Right Hon. Henry 
Faucet, M.P., D.C.L., F.R.S., Professor of Political 
Economy in the University of Cambridge. . . 251 

CHAPTER XVI. 
Protection and Its Uses; By Professor W. D. Wilson, 

Cornell University. ..... 291 

CHAPTER XVU. 
Speech op Hon. George McDuppie, of South Carolina, 

in the Senate, January 29, 1844. . . . .296 

CHAPTER XVIII. 
The Tariff; By Hon. Justin S. Morrill of Vermont, in 
the Senate of the United States. December 8, 1881, on 
the Bill to Establish a Tariff Commission. . . 307 



CONTENTS. 



CHAPTER XIX. 

Page. 
The Establishment of Protection in the United 

States; By Prof. W. G. Sumner, Yale College. . 331 

CHAPTER XX. 
Tariff Commission; By Hon. Samuel J. Randall of Penn- 
sylvania. ....... 353 

CHAPTER XXI. 
Free Trade; By Hon. Frank H. Hurd. . . .362 

CHAPTER XXII. 
The Tariff; By Hon. Wm. P. Frye. . . .371 

CHAPTER XXIII. 

Necessity and Benefit of the Speedy Reduction 

OF Tariff Taxation; By Hon. D, A.Wells. . . 401 

" CHAPTER XXIV. 
Views of President Lincoln. . . , . 428 

CHAPTER XXV. 
The Tariff ; By Hon. John Randolph Tucker of Virginia, 

in the House of Representatives, Friday, May 5, 1882. . 429 

CHAPTER XXVI. 

Free Trade; By Hon. John G. Carlisle. . ^ . .436 

CHAPTER XXVII. 
Free Trade for Shipping; By Hon. James G. Blaine, 

LL.D 443 

CHAPTER XXVIII. 
"Something Else; " By M. Frederick Bastial, Member of 

the Institute of France. ..... 446 

CH^gTER XXIX. 
Free Trade; By Prof. Emn^De Lavelcye. . , ' , 451 

CHAPTER XXX. 
Tariff and Wages; F. W. Taussig. .... 455 



CONTENTS. 



CHAPTER XXXI. 

Page. 
^ Free Trade should be the Ultimate End and Aim 

OF Tarifp Legislation; Ex-President James A. Gar- 
field. . . . . . . -. .457 

CHAPTER XXXII. 
Tariff Reform; Hon. William R. Morrison. . . 459 

CHAPTER XXXIII. 
Business Depression and Revenue Reform; Abram S. 

Hewitt. . . . . . . .469 

CHAPTER XXXIV. 
The Farmers' Question; Jolm L. Hayes, LL.D. . 479 

CHAPER XXXY. 

^ The Interests of the Farmer Indefinitely Postponed; 

Prof. John Bascom. . . . . .502 

CHAPTER XXXVI. 
The Ground of Protection Changed; Horace White. . 504 

CHAPTER XXXVII. 
^ Protection Dogmas; Hon. Wm. M. Springer. . . 508 

CHAPTER XXXVm. 
-> Protection Reduces Prices; Prof. Robert E. Thompson, 

M.A. 510 

CHAPTER XXXIX. 

Does Protection Raise Prices? Prof. A. L. Perry. . 514 

CHAPTER XL. 
Comparing American Wages with English Wages, and 
I showing how small the difference in the pay, and how 

small a tariff would be needed to protect American labor 
if raw materials were free. .... 521 



EMINENT MEN 



WHOSE OPINIONS ARE CONTAINED IN 


THIS BOOK. 


Page 


Adams, John, . . . . . 317 


Adams, John Quincy, 








347 


Baird, Henry Carey, 








231-250 


Bascom, John, . 








502-3 


Bastiat, M. Frederic, 








446-450 


Bayard, T. F., . 








316 


Beck, Jas. B., . 








360, 392 


Blanqui, Jerome Adolpl 


16, 






44 


Blaine, James G., 








443-445 


Bowen, Francis, 








160-179 


Calhoun, John C, 








317,336 


Carey, Henry C, 








133-142 


Carhsle, John G., 








436-442 


Chapin, Aaron L., 








13-24 


Clay, Henry, 








62-83 


Cobden, Richard, 








180-192 


Dodge, J. R., . 








241-243 


Fawcett, Henry, 








251-290 


Frye, Wm. P., . 








371-400 


Garfield, Jas. A., 








457-8 


Greeley, Horace, 








100-123 


Hamilton, Alexander, 








65, 122, 317 


Hayes, John L., 








477-501 


Hayne, Robert, . 








371 


Hendricks, Thomas A., 








360 


Hewitt, Abram S., 








469-.476 


Hurd, Frank H., 








362-370 


Jackson, Andrew, 








350 


Jefferson, Thomas, 








317 


Kelley, Wm. D., 








487 


Laveleye, Emile De, 








451-454 


Lincoln, A., 








428 


List, 








293 
(9) 



10 



INDEX. 



Page. 


McDuffie, Geo., . . . . . 296-306 


McKinley, Wm., Jr., . 








365 


McCuUocli, 








511 


Madison, James, 








315,318,332 


Marshall, Wm., 








382, 412 


Mill, John Stuart, 








84-99 


Mongredien, A., 








499 


Monroe, James, 








332, 335 


Morrell, Justin S., 








307-330 


Morrison, Wm. R., 








459-468 


Newhall, Howard M., . 








411 


Perry, Arthur Latham, 








514-520 


Polk, James K., 








319 


Randall, Samuel J., 








353-361 


Ricardo, 








122 


Say, Jerome Baptiste, 








44-61 


Schoenhof, J., . 








521-528 


Shearman, Thos. G., 








203-230 


Sherman, John, 








372 


Smith, i\dam, . 








25-43 


Springer, Wm. M., 








508-9 


Stephens, Thadeus, 








322 


Sumner, Wm. G., 








331-352 


Taussig, F. W., 








455-6 


Thompson, Robert E., 








510-513 


Tucker, John Randolph 








429-435 


Walker, Amasa, 








143-159 


Washington, George, 








64 


Wayland, Francis, 








124-132 


Webster, Daniel, 








193-202 


Wells, David A., 








401-427 


White, Horace, . 








504-507 


Wilson, W. D., . 








291-295 



CHAPTER I. 

INTERNATIONAL TRADE. 
By Aaron L. Chapin, D.D. 



PRESIDENT CHAPIN of Beloit College, has well 
stated in his " First Principles of Political Economy," 
the arguments for and against Protection. I wiU give them 
in full. 

The Theory of Protection distinctly stated is, that, in 
order to promote home industry, the importation of certain 
articles, from countries where they can be produced cheaper 
than at home, should be prohibited or restricted by heavy 
duties. 
— In direct opposition to this, — 

The Theory of Free Trade affirms that a nation's wealth 
and prosperity are best promoted by maintaining the utmost 
freedom for the exchange of all commodities among its own 
people, and with the people of other countries. 

The mere statement of the principles suggests two con- 
flicting economic systems. In practical legislation two cor- 
responding policies have been in conflict through all the 
history of our nation. There seems no place for compro- 
mise: truth and wisdom must lie on one side or the other. 

In the discussion of each department of our science, 
freedom appears as the natural law of industry and trade. 
But on the face of it the theory of protection involves an 
interference with freedom; an interference which affects all 
of the four departments, — production, consumption, distri- 

(13) 



14 INTERNATIONAL TRADE. 

button, and exchange, though applied most directly to the 
last named. Is it not plain, then, that the presumption is 
against the theory that the burden of proof is laid over 
upon its advocates ? What are the arguments urged to 
sustain it ? We can notice only the three most important 
and plausible. It is said, — 

1. Protection is necessary to secure that variety of indus- 
try and that balance of different industries which are essen- 
tiial to a people's prosperity. This is the broad proposition 
which underlies and includes all arguments for the system. 
In form the argument is logical. It gives for a major 
premise the afiQrmation that a varied and balanced industry 
is essential to a people's prosperity. The minor premise is 
that protection is a necessary means to varied and balanced 
industry. If the premises are admitted, the conclusion is 
sound: a protective policy must favor a people's prosperity. 

The truth of the major premise cannot be questioned. 
On the other hand, it is worthy to be presented in fuU force, 
resolved into several particulars, as a kind of summary of 
economic principles. 

a. Every country has a great variety of resources, and 
the development of all its resources conduces to its greatest 
wealth. 

I. Among the population of every country there is a 
corresponding diversity of native talent, and labor is most 
effective when every one has scope for doing that for which 
he is best fitted. 

c. The actual wants of men are equally diverse, and the 
highest happiness of a people depends on the degree in 
which these varied wants are provided for. 

d. A diversity of occupations makes a home-market for 
all sorts of products, saving cost of transportation, favoring 
division of labor, and binding all classes together by ties of 
mutual helpfulness and common interests. 

e. Varied industry favors the social and moral advance- 



INTERNATIONAL TRADE. 15 

ment of a people, quickening and broadening minds, enlarg- 
ing hearts, and impelling to noblest action in the lines of 
rectitude and benevolence. 

These statements will be readily accepted by all candid 
minds. As bearing on the question under consideration, 
they need but a single qualification. It does not follow that 
a people must hasten by all means to develop every source 
of wealth existing among them, or maintain at all hazards 
every possible form of industry. The people of Barbadoes 
have ample facilities for raising table vegetables, but they 
have greater advantages for raising sugar. Hence it may 
be good policy for them to produce mainly sugar, and get 
the other provisions from other countries, where the cost of 
raising them is greater, perhaps, than it would be on their 
own soil. Many such cases do exist, but they are exceptions 
which prove the rule. 

The real issue is joined on the second or minor premise, — ■ 
protection is necessary to secure diversified industry. This 
proposition is met by a flat denial, and the positive affirma- 
tion that there is a better and surer way of reaching that 
result. "Where no interference or obstruction is allowed, 
there comes a spontaneous development which is safe and 
constant, because it is in accordance with nature's law. 
This thought may be unfolded in a few distinct, yet con- 
nected, propositions. 

a. There is a natural growth of human industry, the 
laws of which are as fixed and certain as those which per- 
tain to the growth of a tree. 

h. Free competition is the healthy stimulus to that 
growth. 

c. Under the natural law of development, industry will 
be applied to the several native resources of a country as 
fast as the increase of labor and capital will warrant. 

d. Men's instinct for accumulation, following diverse 
individual capacities, tastes, and predilections, is the safest 



IG INTERNATIONAL TRADE. 

guide to determine the order in whicli labor and capital shall 
be applied to those various resources. Under it, whatever 
promises a profit will be undertaken as soon as it can be 
without sacrificing a greater profit elsewhere. 
__e. The attempt to force labor and capital into certain 
employments before their time deranges the order of nature, 
and produces reactions which hinder the desired result. 

/. At any stage of this development, if exchange is free, 
foreign products are purchased with the fruits of a people's 
most effective labor, that is, with those articles which they 
can then produce to the best advantage; which they can best 
afford to part with, because they are obtained at the least 
cost. By all such advantageous trade, capital, the prime 
element of varied industry, is increased, and labor is sus- 
tained. 

g. When, by this natural progress, a people come to take 
up a new industry for which they have natural advantages 
and God-given capacity, no foreign competition can crush it; 
for, even in its infancy, it is charged with the nation's life 
and strength. 

— h. An industry which is not indigenous, which has no 
natural advantages, or which is prematurely set up and 
fostered by artificial means, can have only a sickly, uncertain 
life, and is supported at a wasteful expenditure of a nation's 
resources. 

The strong reason urged on the other side to prove that 
protection is necessary is thus presented: — 

" Foreign competition crushes out the home production of 
all but the rudest and coarsest articles of manufacture, and 
prevents the establishment of a varied industry, unless the 
government interfere, as the personification of the nation 
and its co-ordinating power, to restore the equilibrium by 
discouraging imports." 

If the question is raised, how foreign competition is able 
to do this, the answer must be that the foreign country has 



INTERNATIONAL TRADE. 17 

either superior natural resources, or more abundant capital, 
or laborers in greater numbers, and better skilled for the 
work to be done, or possibly all these advantages combined. 
If this be so, it may be asked again, how can government 
interference, discouraging imports, counterbalance these 
advantages? It is quite evident that protection cannot add 
to the natural resources of a country. It can never give to 
France the coal-fields of England, nor bring to the prairies of 
Illinois the water-powers of New England, nor secure to 
Germany the cotton-raising facilities of our Southern States. 
Obviously a protective tariff cannot create capital. Capital 
springs and grows only by industry and frugality. It is the 
fruit of saving. And certainly legislation has no power to 
create men, or endow them with skill. Population increases 
both by births and immigration, according to the abundance 
of the necessaries of life which are furnished ; and a people 
grow in skill as they grow in intelligence, and bring their 
faculties into active exercise. 

All that protection can do is to concentrate capital and f 
labor on one employment, and for this it lays a special bur- • 
den on all others for the benefit of the favored occupation. ^ 
The advocates of this policy keep out of sight the fact that 
it can do nothing more than to change the direction of capi- 
tal and labor, and that the duty is a tax laid upon the many 
for the benefit of a few. When articles of foreign produc- 
tion are imported, they are to be paid for by the products of 
home-labor, and capital; and the question of economy is 
Which is the cheapest? . Which will bring the largest returns 
for a certain amount of labor, — to make these articles our- 
selves, or to make sonaething else with which to buy them? 
Left free from government interference, home labor and cap- 
ital will lay hold of whatever natural resources a country 
possesses, and, with reference to both home wants and for- 
eign wants, produce the things most feasible and desirable at 
the cheapest rates. The surplus of these products will pay 



18 INTERNATIONAL TRADE. 



for the foreign goods. Capital will be increased by both the 
productive industry and the trade; and, as a people grow 
strong in capital and in men, it is not possible for foreign 
competition to restrict their industry, or to prevent their 
taking up all the variety of industry which their needs require, 
and the facilities of their country favor. Competition, free 
and fair, is ever the strongest and healthiest stimulus of both 
productive industry and wide-spread active trade. 

2. It is strongly urged that protection is a necessary 
means of maintaining national independence. This is a spe- 
cious argument, because the phrase " national independence " 
has a patriotic ring, to which the popular ear and the popu- 
lar heart are pecuharly sensitive. But, as it stands in the 
proposition before us, it simply covers a subtle sophistry. 

For individuals and for nations there are two kinds of inde- 
pendence. One may withdraw from his fellow-men to a cave 
in the \^dlderness, and thus keep himself ahve, and possibly 
find interest and enjoyment in a hermit-life. He may glory 
in his independence. But is there anything noble in such 
isolation? Is it the way for a man to make the most of him- 
self? The independence of genuine manhood is of another 
sort. It is the individuality of capacities, acqiiisitions, and 
character, which is able to stand on its own basis in full and 
free relations with fellow-men. It is, in the midst of society, 
a distinct personahty, giving and receiving, supporting and 
supported, blessing and blessed, through the varied inter, 
course which nature prompts, and by which the completest 
development of the man and of the race is advanced. So of 
nations, there is an independence of isolation, such as China 
and Japan until recently maintained. But that independ- 
ence ^yhich is the strength and glory of a nation is of another 
kind. It is an individuality of national resources and char- 
acter which stands up in the -full brotherhood of nations, and 
in the consciousness of its own strength enters into all ofiSces 
of mutual dependence through which nations grow, and civ- 
ilization makes progress. 



INTERNATIONAL TRADE. 19 

The policy of protection fosters the narrower kind of inde- 
pendence. It is a restrictive pohcy. Carried out to its logi- 
cal conclusion, it leads to isolation. The sophistry referred 
to consists in the concealment of this fact, while the term 
'' national independence" is put forth in its broader, nobler 
sense. 

' In an economic point of view, the real independence of a. 
nation is commercial independence. That means, not that it 
does not need or will not have the productions of other 
nations, but that it is able to command them. The basis of 
such independence is the home-production of wealth. The 
way to increase wealth is to use to the best possible ad van • 
tage the gifts of nature, and then, in the world's great mart, 
^ell where things can be sold on the best terms, and buy 
where things can be bought on the best terms. The 
nation is strongest and most complete in her independence, 
which can open most freely every avenue for the wealth of 
the world to flow in upon her, because, as the fruit of her own 
vital energies, freely exerted, she has wealth in abundance to 
give a fair equivalent. 

A nation comes to this full maturity by a steady natural 
growth, just a sa child comes to full manhood. In both cases 
freedom is the law of growth. Fair competition helps a 
nation's growth both in general -wealth and in particular 
industries, just as the wrestling of a boy with one older and 
stronger than himself helps to develop in him particular mus- 
cles, and the pluck and vigor of a whole manhood. When 
at times worsted and thrown, the boy may rise and say, 
" You beat me now, but I don't give up the contest. Let 
me get my growth, and I'll show you what I can do." The 
effort by protection to hasten a nation's independence is like 
binding an infant's limbs in splints, that he may sooner 
stand alone. The artificial apphance may develop prema- 
turely a single function, but it is at a wasteful expense of 
general vigor, and is quite sure to induce chronic weakness 
and deformity. 



20 INTERNATIONAL TRADE. 

3. The advantages of a home market for agricultural 
products are often urged in favor of the protective system. It 
is certainly an advantage to a farmer to find, in a manufac- 
turing village near, a market for his produce. But, if this 
market is made and sustained for him by a protective tariff, 
he must pay for tools, for salt, for dry-goods, for many of 
the manufactured articles he needs, from twenty to fifty per 
cent, more than they would cost under the rule of free trade. 
This adds to the cost of producing his crops, and offsets what 
he may save in the expense of transportation to the distant 
commercial city. 

But here, as in the first case, we take issue directly on the 
main point. The assumption that protection creates the 
home-market is a fallacy. These centers of varied industry 
grow up naturally and healthily with the increase of popula- 
tion and wealth. -Mechanical genius, the investigating turn 
of mind, the energy of will-power, managing capacity, — 
these qualities come not of protective tariffs. They are the 
gifts of God to men. Left to themselves, and stimulated by 
competition, they spontaneously lay hold on all gifts of God 
in nature, and, using all available capital, set up the work- 
shops of industry, wherever best opportunities are presented. 

Furthermore, the term "home market," in thi^ discussion, 
has force only as it implies the production at home of all 
manufactures wanted, and the consumption at home of all 
agricultural produce raised, — a condition of things, attain- 
able, if at all, only after the lapse of centuries. Meantime a 
people must buy the things they cannot produce, by selling 
the surplus of that which they can produce. For a long 
time to come this country will have a large surplus of bread- 
stuffs, cotton, petroleum, silver, and gold, to dispose of. We 
can sell to others only as we give otliers a fair chance to sell 
to us. Domestic commerce and foreign commerce are neces- 
sarily interlocked. The prices of agricultural products in 
our home markets are determined by the prices in markets 



INTERNATIONAL TRADE. 21 

abroad. Where trade is freest, the prices will, on the aver- 
age, be the best. Hence, free trade is the essential condition 
of a sound and healthy home market. Of all classes, those 
devoted to agriculture bear the heaviest share of the burden 
laid by the protective tariff, while they reap no direct benefit 
from it. 

There are positive objections to the system of protection, 
which may be concisely stated as follows : — 

1. Protection introduces and fosters antagonism between 
the different industries of a country. The idea of giving 
protection to every branch of industry is absurd. The theory 
implies special encouragement to certain manufactures by 
taxing all other interests in their behalf. The duty "\A^hich 
protects the woolen-manufacture increases the cost of the wool- 
grower's clothing, while the competition of cheap wools from 
abroad keeps down the price of his product. A tariff on the 
foreign wools will enhance the cost of material to the manu- 
facturer. So two parties whose interests are really one are 
set against each other. 

2. The unnatural stimulus given by protective legislation 
leads to over-production, and consequent stagnation and fail- 
ure. The first effect of a high duty is to raise prices, and 
increase the profits of the protected industry. This causes 
a rush into that branch of production, till it is quickly over- 
done, and a disastrous re-action comes. 

3. Protection diminishes the legitimate revenues of the 
state, at the same time that it lays a heavy tax on the people. 
Just so far as the tariff is protective in its operation, it re- 
duces the imposts from which the government gets its income; 
yet, just so far as prices of the protected article in the 
market are enhanced by the tariff^ all consumers pay a 
a special tax for the benefit of the favored producer. 

4. In its application, the policy of protection must be 
unstable, disturbing the course of industry by frequent 
changes. This follows inevitably from the conflict of inter- 



22 INTERNATIONAL TRADE. 

ests just referred to. When the duty on iron is high, all 
who use iron as the material of their industry clamor against 
it. So new candidates for the special favor press their suit 
for a change of the tariff in their interest. With every ses- 
sion of Congress movements are made for some change of 
the tariff. A protective tariff can never be made fair and 
equal to all ; for its fundamental principle is an unjust favor- 
itism, against which those not favored instinctively protest 
and contend. 

5. Protection tends to demoralize our national legislation. 
The lobby of the Capitol is thronged with representatives of 
certain manufactures, seeking to obtain or to perpetuate spe- 
cial protection. Money is freely used, and bargains are 
made to combine the friends of separate measures, when 
votes are given. Proposed acts come thus to be judged of 
not by their real merits, but by their relation to personal 
interests. 

6. Protection tends to corrupt the public morals and the 
pubhc service. It offers strong temptations to the violation 
of law by smuggling. The resistance of men's consciences 
to this temptation is slight, because the tariff -law rests on no 
ground of absolute right. The nice sense of honor and 
right is deadened ; and the making of false invoices, the 
swearing of false oaths, and direct bribery at the custom- 
house, are regarded as venal sins. Officials of the govern, 
ment come into collusion and partnership with these crimes, 
and betray the sacred public trusts with which they are 
charged. 

Until within the last half century, the protective policy 
has ruled the industry and trade of the world, with only 
here and there an exception, like Holland in her best days. 
Free trade has had scarcely a chance to try its experiment. 
Its principles are, however, illustrated and sustained in the 
hundred years' history of our nation's independent Hfe. 
The States of our republic, in their extent of territory, their 



INTERNATIONAL TRADE. 23 

diversity of resources, tlie varied races and endowments of 
their people, and their distinctive interests, constitute a world 
by themselves. Fortunately our Constitution forever forbids 
the protective policy to restrict their trade with each other. 
Here is a broad arena for the experiment of free trade. For 
nearly forty years the writer has watched the course of that 
experiment in the unfolding growth of a young Western 
State. Her chief industry was at the first, and must long 
continue to be, agriculture. But as population poured 
into the prairies and groves, and agriculture yielded 
a surplus of home capital, and a basis of credit was laid 
for the introduction of Eastern capital, every kind of indus- 
try suited to her climate and conditions has been successfully 
established. Her mines have been worked, her water- 
powers have been utilized, villages and cities have sprung up 
suddenly, and the diverse genius and taste of her sons have 
found ample scope and stimulus for profitable exercise. 
According to the theory of protection, the competition of 
New England manufactures, brought in freely by the best 
facilities *for cheap and rapid transportation, should have 
"crushed out the home production of all but the rudest 
and coarsest articles of manufacture." But the facts are all 
against the theory. Woolen factories, cotton factories, shoe 
factories, iron works, machine shops, paper mills, establish- 
ments for making agricultural implements, all have been set 
up and carried on with a success that promises to be abiding 
and expanding. This result of a brief but fair experiment 
of the principle of free trade confirms every phase of that 
doctrine, and shows that what is philosophically sound and 
true is also practically safe and wise. 

The Golden Rule of 'Christ is full of wisdom and right- 
eousness in its application to the intercourse of nations. We 
cherish the fond hope that the day is not distant when the 
nations will conform their policies to the rule, and '-do each 
to others as they would have others do to them." Then the 



24 INTERNATIONAL TRADE. 

theory of protection, with its false ideas of antagonism and 
selfish isolation, will have no place; but, instead, the brother- 
hood of nations as well as of individual men will be 
recognized, and the broad philantrophy which Christianity 
inculcates and aims to make universal, will have free scope 
to work out the world's emancipation from all wrong and 
evil. In such a state, the first principles of sound political 
economy will find their consummate application. 



CHAPTER II. 

MODERN POLITICAL ECONOMY. 



ADAM SMITH, LL.D., F.R.S., has been properly called 
the father of Modern Political Economy. His argu- 
ments have often been repeated, but we will give a few of 
them : 

OF RESTKAINTS UPON THE IMPORTATION FROM FOREIGN COUN- 
TRIES OF SUCH GOODS AS CAN BE PRODUCED AT HOME. 

By restraining, either by high duties, or by absolute pro- 
hibitions, the importation of such goods from foreign coun- 
tries as can be produced at home, the monopoly of the home 
market is more or less secured to the domestic industry 
employed in producing them. Thus the prohibition of im- 
porting either live cattle or salt provisions from foreign 
countries secures to the graziers of Great Britain the monop- 
oly of the home market for butcher's meat. The high 
duties upon the importation of corn, which in times of mod- 
erate plenty amount to a prohibition, give a like advantage 
to the growers of that commodity. The prohibition of the 
importation of foreign woolens is equally favorable to the 
woolen manufacturers. The silk manufacture, though alto- 
gether employed upon foreign materials, has lately obtained 
the same advantage. The linen manufacture has not yet 
obtained it, but is making great strides towards it. Many 
other sorts of manufacturers have, in the same manner, 
obtained in Great Britain, either altogether, or very nearly 
a monopoly against their countrymen. The variety of 
2 (25) 



26 MODERN POLITICAL ECONOMY. 

goods of wMch the importation into Great Britain is pro- 
hibited either absolutely, or under certain circumstances, 
greatly exceeds what can easily be suspected by those who 
are not well acquainted with the laws of the customs. (Re- 
stnciions on importations are noio few.') 

That this monopoly of the home market frequently gives 
great encouragement to that particular species of industry 
which enjoys it, and frequently turns towards that employ- 
ment a greater share of both the labor and stock of the 
society than would otherwise have gone to it, cannot be 
doubted. But whether it tends either to increase the gen- 
eral industry of the society, or to give it the most advan- 
tageous direction, is not, perhaps, altogether so evident. 

The general industry of the society can never exceed what 
the capital of the society can employ. As the number of 
workmen that can be kept in employment by any particular 
person must bear a certain proportion to his capital, so the 
number of those that can be continually employed by all the 
members of a great society, must bear a certain proportion 
to the whole capital of that society, and can never exceed 
that proportion. No regulation of commerce can increase 
the quantity of industry in any society beyond what its cap- 
ital can maintain. It can only divert a part of it into a 
direction into which it might not otherwise have gone; and 
it is by no means certain that this artificial direction is likely 
to be more advantageous to the society than that into which 
it would have gone of its own accord. 

Every individual is continually exerting himself to find 
out the most advantageous employment for whatever capital 
he can command. It is his own advantage, indeed, and not 
that of the society, which he has in view. But the study of 
his own advantage, naturally, or rather necessarily, leads 
him to prefer that employment which is most advantageous 
to the society. 

I. Every individual endeavors to employ his capital as 



MODERN POLITICAL ECONOMY. 27 

near home as he can, and consequently as much as he can in 
the support of domestic industry, provided always that he 
can thereby obtain the ordinary, or not a great deal less than 
the ordinary, profits of stock. 

Thus, upon equal or nearly equal profits, every wholesale mer- 
chant naturally prefers the home trade to the foreign trade of 
consumption, and the foreign trade of consumption to the 
carrying trade. In the home trade his capital is never so long 
out of his sight as it frequently is in the foreign trade of 
consumption. He can know better the character and situa- 
tion of the person whom he trusts, and if he should happen 
to be deceived, he knows better the laws of the country from 
which he must seek redress. In the carrying trade, the 
capital of the merchant is, as it were, divided between two 
foreign countries, and no part of it is ever necessarily brought 
home, or placed under his own immediate view and com- 
mand. The capital which an Amsterdam merchant employs 
in carrying corn from Konigsberg to Lisbon, and fruit and 
wine from Lisbon to Konigsberg, must generally be the 
one-half of it at Konigsberg and the other half at Lisbon. 
No part of it need ever come to Amsterdam. The natural 
residence of such a merchant should either be at Konigsberg or 
Lisbon, and it can only be some very particular circumstances 
which can make him prefer the residence of Amsterdam. 
The uneasiness, however, which he feels at being separated 
BO far from his capital, generally determines him to bring 
part both of the Konigsberg goods which he destines for the 
market of Lisbon, and the Lisbon goods which he destines 
for that of Konigsberg, to Amsterdam; and though this 
necessarily subjects him^to a double charge of loading and 
unloading, as well as to the payment of some duties and 
customs, yet for the sake of having some part of his capital 
always under his own view and command, he willingly sub- 
mits to this extraordinary charge; and it is in this manner 
that every country which has any considerable share of the 



28 MODERN POLITICAL ECONOMY. 

carrying trade, becomes always, the empormm, or general 
market, for the goods of all the different countries whose 
trade it carries on. The merchant, in order to save a second 
loading and unloading, endeavors always to sell in the home 
market as much of the goods of all those different countries 
as he can, and thus, so far as he can, to convert his carrying 
trade into a foreign trade of cohsumption. A merchant, in 
the same manner, who is engaged in the foreign trade of 
consumption, when he collects goods for foreign markets, 
will always be glad, upon equal or nearly equal profits, to 
sell as great part of them at home as he can. He saves him- 
self the risk and trouble of exportation, when, so far as 
he can, he thus converts his foreign trade of consumption 
into a home trade. Home is in this manner the center, if I 
may say so, round which the capitals of the inhabitants of 
every country are continually circulating,, and towards which 
they are always tending, though by particular causes they 
may sometimes be driven off and repelled from it towards 
more distant employment. But a capital employed in the 
home trade, it has already been shown, necessarily puts into 
motion a greater quantity of domestic industry, and gives 
revenue and employment to a greater number of the inhab- 
itants of the country, than an equal capital employed in the 
foreign trade of consumption ; and one employed in the 
foreign trade of consumption has the same advantage over 
an equal capital employed in the carrying trade. Upon 
equal or only nearly equal profits, therefore, every individual 
naturally inclines to employ his capital in the manner in 
which it is hkely to afford the greatest support to domestic 
industry, and to give revenue and employment to the 
greatest number of people of his own country. 

II. Every individual who employs his capital in the 
support of domestic industry, necessarily endeavors so to 
direct that industry, that its produce may be of the greatest 
possible value. 



MODERN POLITICAL ECONOMY. 29 

The produce of industry is what it adds to the subject or 
materials upon which it is employed. In proportion as the 
value of this produce is great or small, so will likewise be 
the profits of the employer. But it is only for the sake of 
profit that any man employs a capital in the support of 
industry; and he will always, therefore, endeavor to employ 
it in the support of that industry of which the produce is 
likely to be of the greatest value, or to exchange for the 
greatest quantity either of money or of other goods. 

But the annual revenue of every society is always precisely 
equal to the exchangeable value of the whole annual produce 
of its industry, or rather is precisely the same thing with 
that exchangeable value. As every individual, therefore, 
endeavors as much as he can both to employ his capital in 
the support of domestic industry, and so to direct that 
industry that its produce may be of the greatest value, 
every individual necessarily labors to render the annual 
revenue of the society as great as he can. He generally, 
indeed, neither intends' to promote the public interest, nor 
knows how much he is promoting it. By preferring the 
support of domestic to that of foreign industry, he intends 
only his own security; and by directing that industry in 
such a manner as its produce may be of the greatest value, 
he intends only his own gain, and he is in this, as in many 
other cases, led by an invisible hand to promote an end 
which was no part of his intention. Nor is it always the 
worse for the society that it was no part of it. By pursuing 
his own interest he frequently promotes that of the society 
more effectually than when he really intends to promote it. 
1 have never known much good done by those who affected 
to trade for the pubhc good. It is an affectation, indeed, 
not very common among merchants, and very few words 
need be employed in dissuading them, from it. 

What is the species of domestic industry which his capital 
can employ, and of which the produce is likely to be of the 



30 MODERN POLITICAL ECONOMY. 

greatest value, every individual, it is evident, can, in this 
local situation, judge much better than any statesman or 
lawgiver can do for him. The statesman, who should 
attempt to direct private people in what manner they ought 
to employ their capitals, would not only load himself with 
a most unnecessary attention, but assume an authority which 
could safely be trusted, not only to no single person, but to 
no council or senate whatever, and which would nowhere 
be so dangerous as in the hands of a man who had folly and 
presumption enough to fancy himself fit to exercise it. 

To give the monopoly of the home market to the produce 
of domestic industry, in any particular art or manufacture, 
is in some measure to direct private people in what manner 
they ought to employ their capitals, and must, in almost all 
cases, be either a useless or a hurtful regulation. If the 
produce of domestic can be brought there as cheap as that 
of foreign industry, the regulation is evidently useless. If 
it cannot, it must generally be hurtful. It is the maxim of 
every prudent master of a family, never to attempt to make 
at home what it wiU cost him more to make than to buy. 
The tailor does not attempt to make his own shoes, but buys 
them of the shoemaker. The shoemaker does not attempt 
to make his own clothes, but employs a tailor. The farmer 
attempts to make neither the one nor the other, but employs 
those different artificers. All of them find it for their 
interest to employ their whole industry in a way in which 
they have some advantage over their neighbors, and to 
purchase with a part of its produce, or what is the same 
thing, with the price of a part of it, whatever else they have 
occasion for. 

What is prudence in the conduct of every private family, 
can scarce be folly in that of a great kingdom. If a foreign 
country can supply us with a commodity cheaper than we 
ourselves can make it, better buy it of them with some part 
of the produce of our own industry, employed in a way in 



MODERN POLITICAL ECONOMY. 31 

which we have some advantage. The general industry of 
the country, being alv/ays in proportion to the capital which 
employs it, will not thereby be diminished, no more than 
that of the above-mentioned artificers ; but only left to find 
out the way in which it can be employed with the greatest 
advantage. It is certainly not employed to the greatest 
advantage when it is thus directed towards an object which 
it can buy cheaper than it can make. The value of its 
annual produce is certainly more or less diminished, when it 
is thus turned away from producing commodities evidently 
of more value than the commodity which it is directed to 
produce. According to the supposition, that commodity 
could be purchased from foreign countries cheaper than it 
can be made at home. It could, therefore, have been pur- 
chased with a part only of the commodities, or, what is the 
same thing, with a part only of the price of the commodities, 
which the industries employed by an equal capital would 
have produced at home, had it been left to follow its natural 
course. The industry of the country, therefore, is thus 
turned away from a more, to a less advantageous employ- 
ment, and the exchangeable value of its annual produce, 
instead of being increased, according to the intention of the 
lawgiver, must necessarily be diminished by every such 
regulation. 

By means of such regulations, indeed, a particular 
manufacture may sometimes be acquired sooner than it 
could have been otherwise, and after a certain time may be 
made at home as cheap or cheaper than in the foreign 
country. But though the industry of the society may be 
thus carried with advantage into a particular channel sooner 
than it could have been otherwise, it will by no means 
follow that the sum total, either of its industry, or of its 
revenue, can ever be augmented by any such regulation. 
The industry of the society can augment only in proportion 
as its capital augments, and its capital can augment only in 



32 MODERN POLITICAL ECONOMY. 

proportion to what can be gradually saved out of its revenue. 
But the immediate effect of every such regulation is to 
diminish its revenue, and what diminishes its revenue is 
certainly not very likely to augment its capital faster than 
it would have augmented of its own accord, had both their 
capital and their industry been left to find out their natural 
employments. 

Though for want of such regulations the society should 
never acquire the proposed manufacture, it would not, upon 
that account, necessarily be the poorer in any one period of 
its duration. In every period of its duration its whole 
capital and industry might still have been employed, though 
upon different objects, in the manner that was most advan- 
tageous at the time. In every period its revenue might 
have been the greatest which its capital could afford, and 
both capital and revenue might have been augmented with 
the greatest possible rapidity. 

The natural advantages which one country has over 
another in producing particular commodities are sometimes 
so great, that it is acknowledged by all the world to be in 
vain to struggle with them. By means of glasses, hotbeds, 
and hot-walls, very good grapes can be raised in Scotland, 
and very good wine, too, can be made of them at about 
thirty times the expense for which at least equally good 
can be brought from foreign countries. Would it be a 
reasonable law to prohibit the importation of all foreign 
wines merely to encourage the making of claret and bur- 
gundy in Scotland ? But if there would be a manifest 
absurdity in turning towards any employment, thirty times 
more of the capital and industry of the country than would 
be necessary to purchase from foreign countries an equal 
quantity of the commodities wanted, there must be an 
absurdity, though not altogether so glaring, yet exactly of 
the same kind, in turning toward any such employment a 
thirtieth, or even a three hundredth part more of either. 



MODERN POLITICAL ECONOMY. 33 

Whether the advantages which one country has over another 
be natural or acquired, is in this respect of no consequence. 
As long as the one country has those advantages, and the 
other wants them, it will always be more advantageous for 
the latter rather to buy of the former than to make. It is 
an acquired advantage only which one artificer has over his 
neighbor who exercises another trade; and yet they both 
find it more advantageous to buy of one another, than to 
make what does not belong to their particular trades. 

Merchants and manufacturers are the people who derive 
the greatest advantage from this monopoly of the home 
market. The prohibition of the importation of foreign 
cattle, and of salt provisions, together with the high duties 
upon foreign corn, which in times of moderate plenty 
amount to a prohibition, are not near so advantageous to 
the graziers and farmers of Great Britain, as other regula- 
tions of the same kind are to its merchants and manufac- 
turers. Manufactures, those of the finer kind especially, 
are more easily transported from one country to another 
than corn or cattle. It is in the fetching and carrying 
manufactures, accordingly, that foreign trade is chiefly 
employed. In manufactures, a very small advantage will 
enable foreigners to undersell our own workmen, even in 
the home market. It wiU require a very great one to enable 
them to do so in the rude produce of the soil. If the free 
importation of foreign manufactures were permitted, several 
of the home manufactures would probably suffer, and some 
of them, perhaps, go to ruin altogether, and a considerable 
part of the stock and industry at present employed in them 
would be forced to find out some other employment. But 
the freest importation of the rude produce of the soil could 
have no such effect upon the agriculture of the country. 

Country gentlemen and farmers are, to their great honor, 
of all people, the least subject to the wretched spirit of 
monopoly. The undertaker of a great manufactory is some- 



34 MODERN POLITICAL ECONOMY. 

times alarmed if anotlier work of the same kind is estab- 
lished within twenty miles of him. The Dutch undertaker 
of the woolen manufacture at Abbeville stipulated that no 
work of the same kind should be estabhshed within thirty 
leagues of that city. Farmers and country gentlemen, on 
the contrary, are generally disposed rather to promote than 
to obstruct the cultivation and improvement of their neigh- 
bors' farms and estates. They have no secrets, such as those 
of the greater part of manufacturers, but are generally 
rather fond of communicating to their neighbors, and of 
extending as far as possible, any new practice which they 
have found to be advantageous. Pius Questus, says old Cato, 
stahilis-simusque, "niinimeque invidiosus ; minimeque male cogi- 
tantes, sunt, qui in eo studio occupati sunt. Country gentle- 
men and farmers, dispersed in different parts of the country, 
cannot so easily combine as merchants and manufacturers, 
who being collected into towns, and accustomed to that 
exclusive corporation spirit which prevails in them, naturally 
endeavor to obtain against all their countrymen the same 
exclusive privilege which they generally possess against the 
inhabitants of their respective towns. They accordingly 
seem to have been the original inventors of those restraints 
upon the importation of foreign goods, which secure to them 
the monopoly of the home market. It was probably in 
imitation of them, and to put themselves upon a level with 
those who, they found, were disposed to oppress them, that 
the country gentlemen and farmers of Great Britain so far 
forgot the generosity which is natural to their station, as to 
demand the exclusive privilege of supphdng their coimtry- 
men with corn and butcher's-meat. They did not perhaps 
take time to consider, how much less their interest could be 
affected by the freedom of trade, than that of the people 
whose example they followed. 

To prohibit by a perpetual law the importation of foreign 
corn and cattle, is in reality to enact, that the population and 



MODERN POLITICAL ECONOMY. 35 

industry of the country shall at no time exceed what the 
rude produce of its own soil can maintain. 

There seems, however, to be two cases in which it will 
generally be advantageous to lay some burden upon foreign, 
for the encouragement of domestic industry. 
"The first is, when some particular sort of industry is 
necessary for the defense of the country. The defense of 
Great Britain, for example, depends very much upon the 
number of its sailors and shipping. The act of navigation, 
therefore, very properly endeavors to give the sailors and 
shipping of Great Britain the monopoly of the trade of 
their own country, in some cases, by absolute prohibitions, 
and in others by heavy burdens upon the shipping of foreign 
countries. 

SMITH ON THE ADVANTAGE OF PEOTECTION. 

The second case in which it will generally be advantageous 
to lay some burden upon foreign, for the encouragement of 
domestic industry, is when some tax is imposed at home upon 
the produce of the latter. In this case, it seems reasonable 
that an equal tax should be imposed upon the like produce of 
the former. This would not give the monopoly of the home 
market to domestic industry, nor turn towards a particular 
employment a greater share of the stock and labor of the coun- 
try than what would naturally go to it. It would only hinder 
any part of what would naturally go to it from being turned 
away by the tax, into a less natural direction, and would 
leave the competition between foreign and domestic industry, 
after the tax, as nearly as possible upon the same footing as 
before it. In Great Britain, when any such tax is laid upon 
the produce of domestic industry, it is usual at the same 
time, in order to stop the clamorous complaints of our mer- 
chants and manufacturers, that they will be undersold at 
home, to lay a much heavier duty upon the importation of all 
foreign goods of the same kind. 



36 MODERN POLITICAL ECONOMY. 

Such taxes when they have grown up to a certain height, 
are a curse equal to the barrenness of the earth and the 
inclemency of the heavens; and yet it is in the richest and 
most industrious countries that they have been most gener- 
ally imposed. No other countries could support so great a 
disorder. As the strongest bodies only can live and enjoy 
health, under an unwholesome regimen, so the nations only, 
that in every sort of industry have the greatest natural and 
acquired advantages, can subsist and prosper under such 
taxes. Holland is the country in Europe in which they 
abound most, and which from peculiar circumstances con- 
tinues to prosper, not by means of them, as has been most 
absurdly supposed, but in spite of them. 

As there are two cases in which it will generally be advan- 
tageous to lay some burden upon foreign, for the encourage- 
ment of domestic industry, so there are two others in which 
it may sometimes be a matter of deliberation; in the one, how 
far it is proper to continue the free importation of- certain for- 
eign goods; and in the other, how far, or in what manner, it 
may be proper to restore that free importation after it has 
been for some time interrupted. 

The case in which it may sometimes be a matter of delib- 
eration how far it is proper to continue the free importation 
of certain foreign goods, is, when some foreign nation 
restrains by high duties or prohibitions the importation of 
some of our manufactures into their country. Revenge in 
this case naturally dictates retaliation, and that we should 
impose the like duties and prohibitions upon the importation 
of some or all of their manuiactures into ours. Nations 
accordingly seldom fail to retaliate in this manner. The 
French have been particularly forward to favor their own 
manufactures by restraining the importation of such foreign 
goods as could come into competition with them. In this 
consisted a great part of the policy of Mr. Colbert, who, not- 
withstanding his great abilities, seems in this case to have 



^ MODERN POLITICAL ECONOMY. 37 

been imposed upon by the sophistry of merchants and man- 
ufacturers, who are always demanding a monopoly against 
their countrymen. It is at present the opinion of the most 
intelligent men in France that his operations of this kind have 
not been beneficial to his country. That minister, by the 
tariff of 1 667, imposed very high duties upon a great num- 
ber of foreign manufactures. Upon his refusing to moderate 
them in favor of the Dutch, they in 1671 prohibited the 
importation of the wines, brandies, and manufactures of 
France. The war of 1672 seems to have been in part occa- 
sioned by this commercial dispute. The peace of Nimeguen 
put an end to it in 1678, by moderating some of those duties 
in favor of the Dutch, who in consequence took off their pro- 
hibition. It was about the same time that the French and 
English began mutually to oppress each other's industry, by 
the like duties and prohibitions, of which the French, how- 
ever, seem to have set the first example. The spirit of hos- 
tility which has subsisted between the two nations ever since, 
has hitherto hindered them from being moderated on either 
side. In 1697 the English prohibited the importation of 
bonelace, the manufacture of Flanders. The government of 
that country, at that time under the dominion of Spain, pro- 
hibited in return the importations of English woolens. In 
1700, the prohibition of importing bonelace into England 
was taken off upon condition that the importations of the 
English woolens into Flanders should be put on the same 
footing as before. 

There may be a good policy in retaliations of this kind, 
when there is a probability that they will procure the repeal 
of the high duties or prohibitions complained of. The 
recovery of a great foreign market will generally more than 
compensate the transitory inconveniency of paying dearer 
during a short time for some sort of goods. To judge 
whether such retahations are likely to produce such an effect, 
does not, perhaps, belong so much to the science of a legis- 



38 MODERN POLITICAL ECONOMY. 

lator, whose deliberations ought to be governed by general 
principles which are always the same, as to the skill of that 
insidious and crafty animal, vulgarly called a statesman or 
pohtician, whose councils are directed by the momentary 
fluctuations of affairs. When there is no probability that 
any such repeal can be procured, it seems a bad method of 
compensating the injury done to certain classes of our people, 
to do another injury ourselves, not only to those classes, but 
to almost all the other classes of them. When our neighbors 
prohibit some manufactui'e of ours, we generally prohibit, 
not only the same, for that alone would seldom affect them 
considerably, but some other manufacture of theirs. This 
may no doubt give encouragement to some particular class 
of workmen among ourselves, and by excluding some of their 
rivals, may enable them to raise their price in the home mar- 
ket. Those workmen, however, who suffered by our neigh- 
bor's prohibition will not be benefited by ours. ' On the 
contrary, they and almost all the other classes of our citizens 
will thereby be obliged to pay dearer than before for cer- 
tain goods. Every such law, therefore, imposes a real tax 
upon the whole country, not in favor of that particular class 
of workmen who were injured by our neighbors' prohibi- 
tion, but of some other class. 

The case in which it may sometimes be a matter of delib- 
eration, how far, or in what manner it is proper to restore 
the free importation of foreign goods, after it has been for 
some time interrupted, is, when particular manufactures, by 
means of high duties or prohibitions upon all foreign goods 
which can come into competition with them, have been so 
far extended as to employ a great multitude of hands. 
Humanity may in this case require that the freedom of trade 
should be restored only by slow gradations, and with a good 
deal of reserve and circumspection. Were those high duties 
and prohibitions taken away all at once, cheaper foreign goods 
of the same kind might be poui'ed so fast into the home mar- 



MODERN POLITICAL ECONOMY. 39 

ket, as to deprive all at once manjrthousands of our people 
of their ordinary employment and means of subsistence. 
The disorder which this would occasion might no doubt be 
very considerable. It would in all probability, however, be 
much less than is comnionly imagined, for the two following 
reasons: 

First, all those manufactures, of which any part is com- 
monly exported to other European countries without a 
bounty, could be very little affected by tlie freest importa- 
tion of foreign goods. Such manufactures must be sold as 
cheap abroad as any other foreign goods of the same quality 
and kind, and consequently must be sold cheaper at home. 
They would still, therefore, keep possession of the home 
market, and though a capricious man of fashion might some- 
times prefer foreign wares, merely because they were foreign, 
to cheaper and better goods of the same kind that were 
made at home, this folly could, from the nature of things, 
extend to so few, that it could make no sensible impression 
upon the general employment of the people. But a great 
part of all the different branches of our woolen manufac- 
ture, of our tanned leather, and of our hardware, are 
annually exported to other European countries without any 
bounty, and these are the manufactures which employ the 
greatest number of hands. The silk, perhaps, is the manu- 
facture which would suffer the most by this freedom of 
trade, and after it the linen, though the latter much less 
than the former. 

Secondly, though a great number of people should, by 
thus restoring the freedom of trade, be thrown all at once 
out of their ordinary employment and common method of 
subsistence, it would by no means follow that they would 
thereby be deprived either of employment or subsistence. 
By the reduction of the army and navy at the end of the 
late war, more than a hundred thousand soldiers and sea- 
men, a number equal to what is employed in the greatest 



40 MODERN POLITICAL ECONOMY. 

manufactures, were all at once thrown out of their ordinary 
'employment; but, though they no douht suffered some in- 
con veniency, they were not thereby deprived of all employ- 
ment and subsistence. The greater part of the seamen, it is 
probable, gradually betook themselves to the merchant- 
service as they could find occasion, and in the meantime both 
they and the soldiers were absorbed in the great mass of the 
people, and employed in a great variety of occupations. 
Not only no great convulsion, but no sensible disorder arose 
from so great a change in the situation of more than a 
hundred thousand men, all accustomed to the use of arms, 
and many of them to rapine and plunder. The number of 
vagrants was scarce anywhere sensibly increased by it, even 
the wages of labor were not reduced by it in any occupa- 
tion, so far as I have been able to learn, except in that of 
seamen in the merchant-service. But if we compare together 
the habits of a soldier and of any sort of manufacturer, we 
shall find that those of the latter do not tend so much to 
disqualify him from being employed in a new trade, as those 
of the former from being employed in any. The manufac- 
turer has always been accustomed to look for his subsistence 
from his labor only; the soldier to expect it from his pay. 
Applications and industry have been familiar to the one; 
idleness and dissipation to the other. But it is surely much 
easier to change the direction of industry from one sort of 
labor to another, than to turn idleness a*nd dissipation, to 
any. To the greater part of manufactures besides, it has 
already been observed, there are other collateral manufac- 
tures of so similar a nature, that a workman can easily 
transfer his industry from one of them to another. Tiie 
greater part of such workmen too are occasionally employed 
in country labor. The stock which employed them in a 
particular manufacture before, will still remain in the country 
to employ an equal number of people in some other way. 
The capital of the country remaining the same, the demand 



MODERN POLITICAL ECONOMY. 41 

for labor will likewise be the ^ame, or very nearly the same, 
though it may be exerted in different places and for differ- 
ent occupations. Soldiers and seamen, indeed, when dis- 
charged from the king's service, are at liberty to exercise 
any trade, within any town or place of Great Britain or 
Ireland. Let the same natural liberty of exercising what 
species of industry they please, be restored to all His 
Majesty's subjects, in the same manner as to soldiers and 
seamen; that is, break down the exclusive privileges of 
corporations, and repeal the statute of apprenticeship, both 
which are real encroachments upon natural liberty, and add 
to these the repeal of the law of settlements, so that a poor 
workman, when thrown out of employment either in one 
trade, or in one place, may seek for it in another trade or in 
another place, without the fear either of a prosecution or of 
a removal, and neither the public nor the individuals will 
Buffer much more from the occasional disbanding some 
particular classes of manufacturers, than from that of sol- 
diers. Our manufacturers have no doubt great merit with 
their country, but they cannot have more than those who 
defend it with their blood, nor deserve to be treated with 
more delicacy. 

To expect, indeed, that the freedom of trade should ever 
be entirely restored in Great Britain, is as absurd as to 
expect that an Oceania or Utopia should ever be established 
in it. Not only the prejudices of the public, but what is 
much more unconquerable, the private interests of many 
individuals, irresistibly oppose it. Were the officers of the 
army to oppose with the same zeal and unanimity any reduc- 
tion in the number of forces, with which master manufac- 
turers set themselves against every law that is likely to 
increase the number of their rivals in the home market: 
were the former to animate the soldiers, in the same manner 
as the latter enflame their workmen, to attack with violence 
and outrage the proposers of any such regulation, — to 



42 MODERN POLITICAL ECONOMY. 

attempt to reduce the army would be as dangerous as it lias 
now become to attempt to diminish in any respect the 
monopoly which our manufacturers have obtained against 
us. This monopoly has so much increased the number of 
some particular tribes of them that, like an overgrown 
standing army, they have become formidable to the govern- 
ment, and upon many occasions intimidate the legislature. 
The member of parliament who supports every proposal for 
strengthening this monopoly, is sure to acquire not only the 
reputation of understanding trade, but great popularity and 
influence with an order of men whose numbers and wealth 
render them of great importance. If he opposes them, on 
the contrary, and still more if he has authority enough to 
be able to thwart them, neither the most acknowledged 
probity, nor the highest rank, nor the greatest public ser- 
vices, can protect him from the most infamous abuse and 
detraction, from personal insults, nor sometimes from real- 
danger, arising from the insolent outrage of furious and 
disappointed monopolists. 

The undertaker of a great manufacture, who, by the 
home markets being suddenly laid open to the campetition 
of foreigners, should be obliged to abandon his trade, would 
no doubt suffer very considerably. That part of his capital 
which had usually been employed in purchasing materials 
and in paying his workmen might, without much difSculty 
perhaps, find another employment. But that part of it 
which was fixed in work-houses, and in the instruments of 
trade, could scarce be disposed of without considerable loss. 
The equitable regard, therefore, to his interest requires that 
changes of this kind should never be introduced suddenly, 
but slowly, gradually, and after a very long warning. The 
legislature, were it possible that its deliberations could be 
always directed, not by the clamorous importunity of partial 
interests, but by an extensive view of the general good, 
ought upon this very account, perhaps, to be particularly 



MODERN POLITICAL ECONOMY. 43 

careful neither to establish any new monopolies of this 
kind, nor to extend further those which are already estab- 
lished. Every such legislation introduces some degree of 
real disorder into the constitution of the state, which it will 
be difiQcult afterwards to cure without occasioning another 
disorder. 

How far it may be proper to impose taxes upon the im- 
portation of foreign goods, in order, not to prevent their 
importation, but to raise a revenue for government, I shall 
consider hereafter when I come to treat of taxes. Taxes 
imposed with a view to prevent, or even to diminish impor- 
tation, are evidently as destructive of the revenue of the 
customs as of the freedom of trade. 



CHAPTER III. 

EFFECTS OF EEGULATIONS PEESCRIBING THE 
NATURE OF PRODUCTS. 

By Jean-Baptiste Say. 



BLANQUI, in his History of Political Economy, says: 
'' Adam Smith had thrown mnch hght on the theory 
of banks, division of labor, and the foundation of the value 
of things; he had made virtual discoveries, but he had not 
lived long enough to observe their apphcations. It was only 
after his death that people could judge of the effects of 
unlimited competition of which he was one of the first 
apostles, and the complicated pauperism of our days had not 
disturbed the serenity of those in which he lived. Political 
Economy was only the science of the production of wealth. 
It was reserved for a Frenchman (Jean-Baptiste Say), to 
complete the work and initiate us into the mysteries of the 
distribution of the profits of the labor at the same time that 
tie made known to us the so varied phenomena of the con- 
sumption of products." 

The natural wants of society and its circumstances for the 
time being, occasion a more or less lively demand for par- 
ticular kinds of products. Consequently, in these branches 
of production, productive services are somewhat better paid 
than in the rest; that is to say, the profits upon land, capital, 
and labor, devoted to those branches of production, are 
some somewhat larger. This additional profit naturally 
attracts producers, and thus the nature of the products is 
always regulated by the wants of society. 

(44) 



NATURE OF PRODUCTS. 45 



When authority throws itself in the way of this natural 
course of things, and says, the product you are about to 
create, that which yields the greatest profits, and is conse- 
quently the most in request, is by no means the most suitable 
to your circumstances, you must undertake some other, it 
evidently directs a portion of the productive energies of the 
nation towards an object of less desire, at the expense of 
another of more urgent desire. 

In France, about the year 1794, there were some persons 
persecuted, and even brought to the scaffold, for having con- 
verted corn land into pasturage. Yet the moment these 
unhappy people found it more profitable to feed cattle than 
to grow corn, one might have been sure that society stood 
more in need of cattle than of corn, and that greater value 
could be produced in one way than in the other. 

But, said the public authorities, the value produced is of 
less importance than the nature of the product, and we would 
rather have you raise ten dollars worth of grain than twenty 
dollars worth of butcher's meat. In this they betrayed their 
ignorance of this simple truth, that the greatest product is 
always the best; and that an estate, which should produce 
in butcher's meat wherewith to purchase twice as much 
wheat as could have been raised upon it, produces, in reahty, 
twice as much wheat as if it had been sowed with grain ; since 
wheat to twice the amount is to be got for its product. This 
way of getting wheat, they will say to yon, does not increase 
its total quantity. True, unless it be introduced from abroad ; 
but nevertheless, this article must at the time be relatively 
more plentiful than butcher's meat, because the product of 
two acres of wheat is given for that of one of pasture.* 
And, if wheat be sufSciently scarce, and in sufficient request 

* At the disastrous period in question, there was no actual want of wheat; the 
growers merely felt a disinclination to sell for paper money. Wheat was sold for 
real value at a very reasonable rate; and, though a hundred thousand acres of 
pasture land had been converted into arable, the disinclination to exchange wheat 
for a discredited paper money would not have been a jot reduced. 



46 EFFECTS OF REGULATIONS 

to make tillage more profitable tlian grazing, legislative 
interference is superfluous altogether; for self-interest will 
make the producer turn his attention to the former. 

The only question then is, which is the most likely to know 
what kind of cultivation yields the largest returns, the cul- 
tivator or the government; and we may fairly take it for 
granted, that the cultivator, residing on the spot, making it 
the object of constant study and inquiry, and more interested 
in success than anybody, is better informed in this respect 
than the government. 

Should it be insisted upon in argument, that the cultivator 
knows only the price- current of the day, and does not, Hke 
the government, provide for the future wants of the people, 
it may be answered, that one of the talents of a producer, 
and a talent his own interest obliges him assiduously to 
cultivate, is not the mere knowledge, but the fore-knowledge, 
of human wants. 

An evil of the same description was occasioned, when, at 
another period, the proprietors were compelledTto cultivate 
beet-root or woad in lieu of grain; indeed, we may observe, 
en passant, that it is always a bad speculation to attempt 
raising the products of the torrid, under the sun of the tem- 
perate latitudes. The saccharine and coloring juices, raised 
on the European soils, with all the forcing in the world, are 
very inferior in quantity and quality to those that grow in 
profusion in other climates; while, on the other hand, those 
soils yield abundance of grain and fruits too bulky and 
heavy to be imported from a distance. In condemning our 
lands to the growth of products ill suited to them, instead 
of those they are better calculated for, and, consequently, 
buying very dear what we might have cheap enough, if we 
would consent to receive them from places where they are 
produced with advantage, we are ourselves the victims of our 
own absurdity. It is the very acme of skill, to turn the 
powers of nature to best account, and the height of madness 



PRESCRIBING THE NATURE OF PRODUCTS. 47 

to contend against tliem; which is in fact wasting part of 
our strength, in destroying those powers she designed for 
our aid. 

Again, it is laid down as a maxim, that it is better to buy 
products dear, when the price remains in the country, than 
to get them cheap from foreign growers. On this point I 
must refer my readers to that analysis of production which 
we have just gone through. It will there be seen, that 
products are not to be obtained without some sacrifice, — 
without the consumption of commodities and productive -ser- 
vices in some ratio or other, the value of which is in this 
way as completely lost to the community, as if it were to be 
exported. 

I can hardly suppose any government will be bold enough 
to object, that it is indifferent about the profit, which 
might be derived from a more advantageous production, 
because it would fall to the lot of individuals. The worst 
governments, those which set up their own interest in the 
most direct opposition to that of their subjects, have by this 
time learned, that the revenues of individuals are the regen- 
erating source of public revenue; and that, even under des- 
potic and military sway, where taxation is mere organized 
spoliation, the subjects can pay only what they have them- 
selves acquired. 

The maxims we have been applying to agriculture are 
equally applicable to manufacture. Sometimes a govern- 
ment entertains a notion, that the manufacture of a native 
raw material is better for the national industry, than the 
manufacture of a foreign raw material. It is in conformity 
to this notion, that we have seen instances of preference 
given to the woolen and linen above the cotton manufacture. 
By this conduct -we contrive, as far as in us lies, to limit the 
bounty of nature, which pours forth in different climates a 
variety of materials adapted to our innumerable wants. 
Whenever human efforts succeed in attaching to these gifts 



48 EFFECTS OP REGULATIONS 

a value, tliat is to say, a degree of utiKty, whether by their 
import, or by any modification we may subject them to, a 
useful act is performed, and an item added to national 
wealth. The sacrifice we made to foreigners in procuring 
the raw material is not a whit more to be regretted, than the 
sacrifice of advances and consumption, that must be made 
in every branch of production, before we can get a new 
product. Personal interest is, in all cases, the best judge 
of the extent of the sacrifice, and of the indemnity we 
may expect for it; and, although this guide may sometimes 
mislead us, it is the safest in the long run, as well as the 
least costly. 

But personal interest is no longer a safe criterion, if indi- 
vidual interests are not left to counteract and control each 
other. If one individual, or one class, can call in the aid of 
authority to ward off the effects of competition, it acquires a 
privilege to the prejudice and at the cost of the whole commu- 
nity ; it can then make sure of profits not altogether due to 
the productive services rendered, but composed in part of an 
actual tax upOn consumers for its private profit ; which tax 
it commonly shares with the authority that thus unjustly 
lends its support. 

The legislative body has great difficulty in resisting the 
importunate demands for this kind of privileges; the appli- 
cants are the producers that are to benefit thereby, who can 
represent, with much plausibility, that their own gains are a 
gain to the industrious classes, and to the nation at large, 
their workmen and themselves being members of the indus- 
trious classes, and of the nation.* 

When the cotton manufacture was first introduced in 
France, all the merchants of Amiens, Rheims, Beauvias, etc., 
jomed in loud remonstrances, and represented that the indus- 

* No one cries out against them, because very few know who it is that pays the 
gains of tlie moropolist. The real sufferers, the consumers themselves, often feel 
the pressure, without being aware of the cause of it, and are the first to abuse the 
enlightened individuals, who are really advocating their interests. 



PRESCRIBING THE NATURE OF PRODUCTS. 49 

try of these towns was annihilated. Yet they do not appear 
less industrious or rich than they were fifty years ago ; while 
the opulence of Rouen and all Normandy has been wonder- 
fully increased by the new fabric. 

The outcry was infinitely greater, when printed calicoes 
first came into fashion ; all the chambers of commerce were 
up in arms ; meetings, discussions every^'here took place ; 
memorials and deputations poured in from every quarter, 
and great sums were spent in the opposition. Rouen now 
stood forward to represent the misery about to assail her, 
and painted, in moving colors, " old men, women, and child- 
ren, rendered destitute ; the best cultivated lands in the 
kingdom lying waste, and the whole of a rich and beautiful 
province depopulated." The city of Tours urged the lamen- 
tations of the deputies of the whole kingdom, and foretold 
"a commotion that would shake the frame of social order 
itself," Lyons could not view in silence a project "which 
filled all her manufactories with alarm." Never on so im- 
portant an occasion had Paris presented itself at the foot of 
a throne, " watered with the tears of commerce." Amiens 
viewed the introduction of printed calicoes as the gulf that 
must ine\atably swallow up all the manufactures of the king- 
dom. The memorial of that city, drawn up at a joint meet- 
ing of the three corporations, and signed unanimously, ended 
in these terms : " To conclude, it is enough for the eternal 
prohibition of the use of printed calicoes, that the whole 
kingdom is chilled with horror at the news of their proposed 
toleration. Vox populi vox dei" 

Hear what Roland de la Platiere. who had the presenta- 
tion of these remonstrances in quality of inspector-general 
of manufactures, says on this subject: " Is there a single indi- 
vidual at the present moment, who is mad enough to deny, 
that the fabric of printed calicoes employs an immense num- 
ber of hands, what with the dressing of cotton, the spinning, 
weaving, bleaching, and printing ? This article has improved 



50 EFFECTS OF REGULATIONS 

the art of dyeing in a few years, more than all tlie other 
manufactures together have done in a century." 

I must beg my readers to pause a moment, and reflect, 
what firmness and extensive information respecting the 
sources of public prosperity were necessary to uphold an ad- 
ministration against so general a clamor, supported amongst 
the principal agents of authority, by other motives, besides 
that of pubhc utihty. 

Though governments have too often presumed upon their 
power to benefit the general wealth, by prescribing to agri- 
culture and manufacture the raising of particular products, 
they have interfered much more particularly in the concerns 
of commerce, especially of external commerce. These bad 
consequences have resulted from a general system, distin- 
guished by the name of the exclusive or mercantih system^ 
which attributes the profits of a nation to what is technically 
called afavorahle balance of trade. 

We have seen, that the very advantages aimed at by the 
means of a favorable balance of trade, are altogether illusory; 
and that, supposing them real, it is impossible for a nation 
permanently to enjoy them. It remains to be shown, what is 
the actual operation of regulations framed with this object 
in view. 

By the absolute exclusion of specific manufactures of for- 
eign fabric, a government establishes a monopoly in favor of the 
home producers of these articles, and in prejudice of the home 
consumers ; that is to say, those classes of the nation which 
produce them, being entitled to their exclusive sale, can raise 
their prices above the natural rate ; while the home con- 
sumers, being unable to purchase elsewhere, are compelled 
to pay for them unnaturally dear. If the articles be not 
wholly prohibited, but merely saddled with an import-duty, 
the home producer can then increase their price by the whole 
amount of the duty, and the consumer will have to pay the 
difference. For example, if an import duty of 20 cents per 



PRESCRIBING THE NATURE OF PRODUCTS. 51 

dozen be laid upon earthenware plates worth 60 cents per 
dozen, the importer, whatever country he may belong to, 
must charge the consumer 30 cents ; and the home manufac- 
turer of that commodity is enabled to ask 80 cents per dozen 
of his customers for plates of the same quahty ; which he 
could not do without the intervention of the duty ; because 
the consumer could get the same article for 60 cents : thus, 
a premium to the whole extent of the duty is given to the 
home manufacturer out of the consumer's pocket. 

Should any one maintain, that the advantage of producing 
at home counterbalances the hardship of paying dearer for 
almost every article; that our own capital and labor are 
engaged in the production, and the profits pocketed by our 
own fellow-citizens; my answer is, that the foreign com- 
modities we might import are not to be had gratis: that we 
must purchase them with values of home production, which 
would have given equal employment to our industry and 
capital; for we must never lose sight of this maxim, that 
products are always bought ultimately with products. It is 
most for our advantage to employ our productive powers, 
not in those branches in which foreigners excel us, but in 
those which we excel in ourselves; and with the product to 
purchase of others. The opposite course would be just as 
absurd, as if a man should wish ta make his own coats and 
shoes. What would the world say, if, at the door of every 
house an import duty were laid upon coats and shoes, for 
the laudable purpose of compelling the inmates to make 
them for themselves ? Would not people say with justice, 
Let us follow each his own pursuits, and buy what we want 
with what we produce, or, which comes to the same thing, 
with what we get for our products. The system would be 
precisely the same, only carried to a ridiculous extreme. 

Well may it be a matter of wonder, that every nation 
should manifest such anxiety to obtain prohibitory regula- 
tionSj-if it be true that it can profit nothing by them; and 



52 EFFECTS OF REGULATIONS 

lead one to suppose the two cases not parallel, because we 
do not find individual householders solicitous to obtain the 
same privilege. But the sole difference is this, that individ- 
uals are independent and consistent beings, actuated by no 
contrariety of will, and more interested in their character of 
consumers of coats and shoes to buy them cheap, than as 
manufacturers to sell unnaturally dear. 

Who, tnen, are the classes of the community so importu- 
nate for prohibitions or heavy import duties? The producers 
of the particular commodity, that applies for protection from 
competition, not the consumers of that commodity. The 
public interest is their plea, but self-interest is evidently 
their object. Well, but, say these gentry, are they not the 
same thing? are not our gains national gains? By no means: 
whatever profit is acquired in this manner, is so much taken 
out of the pockets of a neighbor and fellow-citizen, and, if 
the excess of a charge thrown upon consumers by the 
monopoly could be correctly computed, it would be found, 
that the loss of the consumer exceeds the gain of the 
monopolist. Here, then, individual and public interest are 
in direct opposition to each other; and, since public interest 
is understood by the enlightened few alone, is it at all 
surprising, that the prohibitive system should find so many 
partisans and so few opponents? 

There is in general _far too little attention paid to the 
serious mischief of raising prices upon the consumers. The 
evil is not apparent to cursory observation, because it ope- 
rates piecemeal, and is felt in a very slight degree on every 
purchase or act of consumption : but it is really most serious, 
on account of its constant recurrence and universal pressure. 
The whole fortune of every consumer is affected by every 
fluctuation of price in the articles of his consumption; the 
cheaper they are, the richer he is, and vice versa. If a single 
article rise in price, he is so much the more poor in respect 
of that article; if all rise together, he is poorer in respect to 



PRESCRIBING THE NATURE OF PRODUCTS. 53 

the whole. And, since the whole nation is comprehended 
in the class of the consumers, the whole nation must in that 
case be the poorer. Besides which, it is crippled in the 
extension of the variety of its enjoyments, and prevented 
from obtaining products whereof it stands in need, in 
exchange for those wherewith it might procure them. It is 
of no use to assert, that, when prices are raised, what one 
gains another loses. For the position is not true, except in 
the case of monopolies; nor even to the full extent with 
regard to them; for the monopolist never profits to the full 
amount of the loss to the consumers. If the rise be occa- 
sioned by taxation or import duty under any shape whatever, 
the producer gains nothing by the increase of price, but 
just the reverse, so that, in fact, he is no richer in his capacity 
of producer, though poorer in his quality of consumer. 
This is one of the most effective causes of national impov- 
erishment, or at least one of the most powerful checks to 
the progress of national wealth. 

For this reason, it may be perceived, that it is an absurd 
distinction to view with more jealousy the import of foreign 
objects of barren consumption, than that of raw materials 
for home manufacture. Whether the products consumed 
be of domestic or of foreign growth, a portion of wealth is 
destroyed in the act of consumption, and a proportionate 
inroad made into the wealth of the community. But that 
inroad is the result of the act of consumption, not of the 
act of dealing with the foreigner; and the resulting stimulus 
to national production, is the same in either case. For, 
wherewith was the purchase of the foreign product made? 
either with a domestic product or with money, which must 
itself have been procured with a domestic product. In 
buying of a foreigner, the nation really does no more than 
send abroad a domestic product in lieu of consuming it at 
home, and consume in its place the foreign product received 
in exchange. The individual consumer himself, probably, 



54 EFFECTS OF REGULATIONS 

does not conduct this operation; commerce conducts it for 
Mm. No one country can buy of another, except with its 
own domestic products. 

In defense of import duties it is often urged, "that when 
the interest of money is lower abroad than at home, the 
foreign has an advantage over the home producer, which 
must be met by a countervailing duty." The lower rate of 
interest is, to the foreign producer, an advantage, analogous 
to that of the superior quality of his land. It tends to 
cheapen the products he raises; and it is reasonable enough 
that our domestic consumers should take the benefit of that 
cheapness. The same motive will operate here, that leads 
us rather to import sugar and indigo from tropical climates, 
than to raise them in our own. 

•'But capital is necessary in every branch of production: 
so that the foreigner, who can procure it at a lower rate of 
interest, has the same advantage in respect to every product; 
and, if the free importation be permitted, he will have an 
advantage over all classes of home producers." Tell me, 
then, how his products are to be paid for. "Why, in specie, 
and there lies the mischief." And how is the specie to be 
got to pay for them? "All the nation has, will go in that 
way; and when it is exhausted national misery will be com- 
plete." So, then, it is admitted, that before arriving at this 
extremity, the constant efflux of specie will gradually render 
it more scarce at home, and more abundant abroad; where- 
fore, it will gradually rise 1, 2, 3, per cent, higher in value 
at home than abroad; which is fully sufficient to turn the 
tide, and make specie flow inwards faster than it flowed 
outwards. But it wiU not do so without some returns; and 
of what can the returns be made, but of products of the 
land, or the commerce of the nation? For there is no 
possible means of purchasing from foreign nations, other- 
wise than with the products of the national land and com- 
merce; and it is better to buy of them what they can 



PRESCRIBING THE NATURE OF PRODUCTS. 55 

produce cheaper than ourselves, because we may rest assured 
that they must take in payment what we can produce 
cheaper than they. This they must do, else there must be 
an end of all interchange. 

In pursuit of what it mistakes for profound policy, or to 
gratify feelings it supposes to be laudable, a government will 
sometimes prohibit or divert the course of a particular trade, 
and thereby do irreparable mischief to the productive powers 
of the nation. "When Philip II became master of Portugal, 
and forbade all intercourse between his new subjects and the 
Dutch, whom he detested, what was the consequence? The 
Dutch, who before resorted to Lisbon for the manufactures 
of India, of which they took off an immense quantity, find- 
•ing this avenue closed against their industry, went straight 
to India for what they wanted, and in the end, drove out the 
Portuguese from that quarter; and, what was meant as the 
deadly blow of inveterate hatred, turned out the main source 
of their aggrandizement. ''Commerce," says Fenelon, "is 
hke the native springs of the rock, which often cease to flow 
altogether, if it be attempted to alter their course."* 

Such are the principal evils of impediments thrown in the 
way of import, which are carried to the extreme point by 
absolute prohibition. There have, indeed, been instances of 
nations that have thriven under such a system ; but then it 
was because the causes of national prosperity were more 
powerful than the causes of national impoverishment. Nations 
resemble the human frame, which contains a vital principle, 
that incessantly labors to repair the inroads of excess and 
dissipation upon its health and constitution. Nature is active 

* The national convention of France prohibited the import of raw hides from 
Spain, on the plea that they injured the trade in those of France; not observing, 
that the self-same hides went back to Spain in a tanned state. The tanneries of 
France being obliged to procure the raw article at too dear a rate, were quickly 
abandoned; and the manufacture was transferred to Spain, along with great part 
of the capital, and many of the hands employed. It is next to impossible for a 
government, not only to do any good to national production by its interference, 
but even to avoid doing mischief. 



B6 EFFECTS OF REGULATIONS 

in closing the wounds and healing the bruises inflicted by 
our own awkardness and intemperance. In like manner, 
states maintain themselves, nay, often increase in prosperity, 
in spite of the infinite injuries of every description, which 
friends as well as enemies inflict upon them. And it is worth 
remarking, that the most industrious nations are those, 
which are the most subjected to such outrage, because none 
others could survive them. The cry is then '-'our system 
must be the true one, for the national prosperity is advanc- 
ing." "Whereas, were we to take an enlarged view of the 
circumstances that for the last three centuries have com- 
bined to develop the power and faculties of man; to survey 
with the eye of intelligence the progress of navigation and 
discovery, of invention in every branch of art and science; 
to take account of the variety of useful animals and vegeta- 
bles that have been transplanted from one hemisphere to the 
other, and to give a due attention to the vast augmentation 
and increased scope both of science and of its practical appli- 
cations that we are daily witnesses of, we could not resist the 
conviction, that our actual prosperity is nothing to what it 
might have been; that it is engaged in a perpetual struggle, 
against the obstacles and impediments thrown into its way; 
and that even in those parts. of the world where mankind is 
deemed the most enlightened, a great part of their time and 
exertions are occupied in destrojdng instead of multiplying 
their resources, in despoiling instead of assisting each other; 
and all for want of correct knowledge and information 
respecting their real interests. 

But, to return to the subject we have just been examin- 
ing, the nature of the injury that a community suffers by 
difficulties thrown in the way of the introduction of foreign 
commodities. The mischief occasioned to the country that 
produces the prohibited article, is of the same kind and de- 
scription. It is prevented from turning its capital and indus- 
try to the best account. But it is not to be supposed that 



PRESCRIBING THE NATURE OF PRODUCTS. 57 

the foreign nation can by this means be utterly ruined and 
stripped of all resource, as Napoleon seemed to imagine, when 
he excluded the products of Britain from the markets of the 
continent. To say nothing of the impossibility of effecting a 
complete and actual blockade of a whole country, opposed as 
it must be by the universal motive of self-interest, the utmost 
effect of it can only be to drive its production into a differ- 
ent channel. A nation is always competent to the purchase 
and consumption of the whole of its own products, for pro- 
ducts are always bought with other products. Do you think 
it possible to prevent England from , producing value to the 
amount of a million, by preventing her export of woolens to 
that amount? You are much mistaken if you do. England 
will employ the same capital and the same manual labor in 
the preparation of ardent spirits, by the distillation of grain or 
other domestic products, that were before occupied in the man- 
ufacture of woolens for the French market, and she will then 
no longer bring her woolens to be bartered for French brandies. 
A country, in one way or other, direct or indirect, always 
consumes the values it produces, and can consume nothing 
more. If it cannot exchange its products with its neighbors, 
it is compelled to produce values of such kinds only as it can 
consume at home. This is the utmost effect of prohibitions; 
both parties are worse provided, and neither is at all the 
richer. 

Napoleon, doubtless, occasioned much injury, both to Eng- 
land and to the continent, by cramping their mutual relations 
of commerce as far as he possibly could. But, on the other 
hand, he did the continent of Europe the involuntary service 
of facilitating the communication between its different parts, 
by the universality of dominion, which his ambition had well- 
nigh achieved. The frontier duties between Holland, Bel- 
gium, part of Germany, Italy, and France, were demolished; 
and those of the other powers, with the exception of England, 
were far from oppressive. We may form some estimate of 



68 EFFECTS OF REGULATIOI^fS 

the benefit thence resulting to commerce, from the discontent 
and stagnation that have ensued upon the establishment of 
the present system of lining the frontier of each state with a 
triple guard of douaniers. All the continental states so 
guarded have, indeed, preserved their former means of pro- 
duction; but that production has been made less advantageous. 

It cannot be denied, that France has gained prodigiously 
by the suppression of the provincial barriers and custom- 
houses, consequent upon her pohtical revolution. Europe 
had, in like manner, gained by the partial removal of the 
international barriers between its different political states; 
and the world at large would derive similar benefit from the 
demolition of those, which insulate, as it were, the various 
communities into which the human race is divided. 

I have omitted to mention other very serious evils of the 
exclusive system ; as, for instance, the creation of a new class 
of crime, that of smuggling; whereby an action wholly inno- 
cent in itself, is made legally criminal; and persons, who are 
actually laboring for the general weKare, are subjected to 
punishment. 

Smith admits of two circumstances, that, in his opinion, 
will justify a government in resorting to import-duties: — 
1. When a particular branch of industry is necessary to the 
public security, and the external supply cannot be safely 
reckoned upon. On this account a government may very 
wisely prohibit the import of gunpowder, if such prohibi- 
tion be necessary to set the powder-mills at home in activity; 
for it is better to pay somewhat dear for so essential an arti- 
cle, than to run the risk of being unprovided in the hour of 
need. 2. Where a similar commodity of home produce is 
already saddled with a duty. The foreign article, if wholly 
exempt from duty, would in this case have an actual privi- 
lege; so that a duty imposed has not the effect of destroying, 
but of restoring the natural equilibrium and relative position 
of the different branches of production. 



PRESCRIBING THE NATURE OF PRODUCTS, 59 

Indeed, it is impossible to find any reasonable ground for 
exempting the production of values by the channel of exter- 
nal commerce from the same pressure of taxation that weighs 
upon the production effected in those of agriculture and man- 
ufacture. Taxation is, doubtless, an evil, and one which 
should be reduced to the lowest possible degree; but when 
once a given amount of taxation is admitted to be necessary, 
it is but common justice to lay it equally on all three 
branches of industry. The error I wish to expose to repro- 
bation is the notion of taxes of this kind are favorable to 
production. A tax can never be favorable to the pubKc 
welfare, except by the good use that is made of its proceeds. 

These points should never be lost sight of in the framing 
of commercial treaties, which are really good for nothing but 
to protect industry and capital, diverted into improper chan- 
nels by the blunders of legislation. These it would be far 
wiser to remedy than to perpetuate. The healthy state of 
industry and wealth is the state of absolute liberty, in which 
each interest is left to take care of itself. The only useful 
protection authority can afford them is that against fraud or 
violence. Taxes and restrictive measures never can be a 
benefit: they are at the best a necessary evil; to suppose them 
useful to the subjects at large, is to mistake the foundation 
of national prosperity, and to set at naught the principles of 
political economy. 

Import duties and prohibitions have often been resorted 
to as a means of retaliation: "Your government throws 
impediments in the way of introduction of our national pro- 
ducts; are not we, then, justified in equally impeding the intro- 
duction of yours? " This is the favorite plea, and the basis 
of most commercial treaties; but people mistake their object; 
granting that nations have a right to do one another as much 
mischief as possible; which, by the way, I can hardly admit; 
I am not here disputing their rights, but discussing their 
interests. 



60 EFFECTS OF REGULATIONS 

Undoubtedly, a nation that excludes you from all com- 
mercial intercourse with her, does you an injury; — robs you, 
as far as in her lies, of the benefits of external comlnerce; if, 
therefore, by the dread of retaliation, you can induce her to 
abandon her exclusive measures, there is no question about 
the expediency of such retaliation, as a matter of mere 
policy. But it must not be forgotten that retaliation hurts 
yourself as well as your rival; that it operates, not defen- 
sively against her selfish measures, but offensively against 
yourself, in the first instance, for the purpose of indirectly 
attacking her. The only point., in question is this, what 
degree of vengeance you are animated by, and how much 
will you consent to throw away upon its gratification. I 
will not undertake to enumerate all the evils arising from 
treaties of commerce, or to apply the principles enforced 
throughout this work to all the clauses and provisions usually 
contained in them. I will confine myself to the remark, 
that almost every modern treaty of commerce has had for 
its basis the imaginary advantage and possibility of the 
liquidation of a favorable balance of trade by an import of 
specie. If these turn out to be chimerical, whatever advan- 
tags, may have resulted from such treaties must be wholly 
referred to the additional freedom and facility of interna- 
tional communication obtained by them, and not at all- to 
their restrictive clauses or provisoes, unless either of the 
contracting parties has availed itself of its superior power, 
to exact conditions savoring of a tributary character; as 
England has done in relation to Portugal. In such case, it 
is mere exaction and spoliation. 

Again, I would observe, that the offer of peculiar advan- 
tages by one nation to another, in the way of a treaty of 
commerce, if not an act of hostility, is at least one of ex- 
treme odium in the eyes of other nations. For the conces- 
sion to one can only be rendered effectually by the refusal 
to others. Hence the germ of discord and of war, with all 



PRESCRIBING THE NATURE OF PRODUCTS. Gl 

its miscliiefs. It is infinitely more simple, and I liope to 
have sliown, more profitable also, to treat all nations as 
friends, and impose no higher duties on the introduction of 
their products, than what are necessary to place them on the 
same footing as those of domestic growth. 

Yet, notwithstanding all the mischiefs resulting from the 
exclusion of foreign products, which I have been depicting, 
it would be an act of unquestionable rashness suddenly to 
change even so ruinous a policy. Disease is not to be eradi- 
cated in a moment; it requires nursing and management to 
dispense even national benefits. Monopolies are an abuse, 
but an abuse in which enormous capital is vested, and num- 
berless industrious agents employed, which deserve to be 
treated with consideration; for this mass of capital and 
industry cannot all at once find a more advantageous chan- 
nel of national production. Perhaps the cure of all the 
partial distresses that must follow the downfall of that 
colossal monster in poHtics, the exclusive system, would be 
as much as the talent of any single statesman could accom- 
plish; yet when one considers calmly the wrongs it entails 
when it is established, and the distresses consequent upon its 
overthrow, we are insensibly led to the reflection, that, if it 
be so difficult to set shackled industry at liberty again, with 
what caution ought we not to receive any proposition for 
enslaving her! 

But governments have not been content with checking the 
import of foreign products. In the firm conviction, that 
national prosperity consists in selling without buying, and 
blind to the utter impossibility of the thing, they have gone 
beyond the mere impo^tion of a tax or fine upon purchas- 
ing of foreigners, and have in many instances offered re- 
wards in the shape of bounties for selling to them. 



CHAPTER IV. 

SPEECH OF HENRY CLAY 

In Defence of the American System,* in the Senate of 
THE United States, Febeuaey 2, 3, and 6, 1832. 



IN one sentiment, Mr. President, expressed by the honor- 
able gentleman from South Carolina (General Hayne), 
though perhaps not in the sense intended by him, I entirely 
concur. I agree with him, that the decision on the system of 
pohcy embraced in this debate, involves the future destiny 
of this growing country. One way I verily believe, it 
would lead to deep and general distress, general bankruptcy 
and national ruin, without benefit to any part of the Union; 
the other, the existing prosperity will be preserved and 
augmented, and the nation will continue rapidly to advance 
in wealth, power, and greatness, without prejudice to any 
section of the confederacy. 

Thus viewing the question, I stand here as the humble 
but zealous advocate, not of the interests of one State, or 
seven States only, but of the whole Union. And never 
before have I felt more intensely the overpowering weight 
of that share of responsibility which belongs to me in these 
deliberations. Never before have I had more occasion than 
I now have to lament my want of those intellectual powers, 
the possession of which might enable me to unfold to this 
Senate, and to illustrate to this people great truths, inti- 

♦We omit some things that would be irrelevant at present, but the principal 
arguments are given. 

(62) 



CLAY ON THE AMERICAN SYSTEM. 63 

mately connected with the lasting^ welfare of my country. 
I should, indeed, sink overwhelmed and subdued beneath 
the appalling magnitude of the task which lies before me, if 
I did not feel myself sustained and fortified by a thorough 
consciousness of the justness of the cause which I have 
espoused, and by a persuasion, I hope not presumptuous, that 
it has the approbation of that Providence who has so often 
smiled upon these United States. 

If the system of protection be founded on principles 
erroneous in theory, pernicious in practice — above all if it 
be unconstitutional, as is alleged, it ought to be forthwith 
abolished, and not a vestige of it suffered to remain. But, 
before we sanction this sweeping denunciation, let us look a 
little at this system, its magnitude, its ramifications, its dura- 
tion, and the high authorities which have sustained it. "We 
shall see that its foes will have accomplished comparatively 
nothing, after having achieved their present aim of breaking 
down our iron foundries, our woolen, cotton, and hemp 
manufactories, and our sugar plantations. The destruction 
of these would, undoubtedly, lead to the sacrifice of im- 
mense capital, the ruin of many thousands of our fellow 
citizens, and incalculable loss to the whole community. But 
their prostration would not disfigure, nor produce greater 
effect upon the whole system of protection, in all its branches, 
than the destruction of the beautiful domes upon the capitol 
would occasion to the magnificent edifice which they sur- 
mount. Why, sir, there is scarcely an interest, scarcely a 
vocation in society, which is not embraced by the beneficence 
of this system. 

It comprehends our coasting tonnage and trade, from 
which all foreign tonnage is absolutely excluded. 

It includes all our foreign tonnage, with the inconsidera- 
ble exception made by treaties of reciprocity with a few 
foreign powers. 

It embraces our fisheries, and all our hardy and enterpris- 
ing fisliermen. 



64 CLAY ON THE AMERICAN SYSTEM. 

It extends to almost every mechanic art. 

It extends to all lower Louisiana, the Delta of which 
might as well be submerged again in the Gulf of Mexico, 
from which it has been a gradual conquest, as now to be 
deprived of the protecting duty upon its great staple. 

It affects the cotton planter himself, and the tobacco plan- 
ter, both of whom enjoy protection. 

Such are some of the items of this vast system of pro- 
tection, which it is now proposed to abandon. We might 
well pause and contemplate, if human imagination could 
conceive the extent of mischief and ruin from its total over- 
throw, before we proceed to the work of destruction. Its 
duration is worthy also of serious consideration. Not to go 
behind the Constitution, its date is coeval with that instru- 
ment. It began on the ever memorable fourth day of July 
— the fourth day of July, 1789. The second act which 
stands recorded in the statute book, bearing the illustrious 
signature of George Washington, laid the corner-stone of 
the whole system. That there might be no mistake about 
the matter, it was then solemnly proclaimed to the American 
people and to the world, that it was necessary for the ' ' en- 
couragement and protection of manufactures," that duties 
should be laid. It is in vain to urge the small amount of 
the measure of the protection then extended. The great 
principle was then established by the fathers of the consti- 
tution, with the father of his country at their head. And it 
cannot now be questioned, that, if the government had not 
then been new and the subject untried,'a greater measure of 
protection would have been applied, if it had been supposed 
necessary. Shortly after, the master minds of Jefferson 
and Hamilton were brought to act on this interesting sub- 
ject. Taking views of it appertaining to the departments of 
foreign affairs and of the treasury, which they respectively 
filled, they presented, severally, reports which yet remain 
monuments of their profound wisdom, and came to the 



CLAY ON THE AMERICAN SYSTEM. 65 

same conclusion of protection to American industry. Mr_ 
Jefferson argued that foreign restrictions, foreign prohibi- 
tions, and foreign high duties, ought to be met at home by 
American restrictions, American prohibitions, and American 
high duties. Mr. Hamilton, surveying the entire ground, 
aiid looking at the inherent nature of the subject, treated it 
with an ability, which, if ever equaled, has not been sur- 
passed, and earnestly recommended protection. 

The wars of the French revolution commenced about this 
period, and streams of gold poured into the United States 
through a thousand channels, opened or enlarged by the 
successful commerce which our neutrality enabled us to 
prosecute. We forgot or overlooked, in the general pros- 
perity, the necessity of encouraging our domestic manufac- 
tures. Then came the edicts of Napoleon, and the British 
orders in council; and our embargo, non intercourse, non- 
importation, and war, followed in rapid succession. These 
national measures, amounting to a total suspension, for the 
period of their duration, of our foreign commerce, afforded 
the most efficacious encouragement to American manufac- 
tures ; and accordingly they everywhere sprung up. While 
these measures of restriction, and this state of war con- 
tinued, the manufacturers were stimulated in their enter- 
prise by every assurance of support, by public sentiment, 
and by legislative resolves. It was about that period (1808) 
that South Carolina bore her high testimony to the wisdom 
of the policy, in an act of her legislature, the preamble of 
which, now before me, reads: 

"Whereas, the establishment and encouragement of domes- 
tic manufactures, is conducive to the interests of a State, by 
adding new incentives to industry, and as being the means of 
disposing to advantage the surplus productions of the agri- 
cuUurist ; and whereas, in the present unexampled state of 
the world, their establishment in our country is not only 
expedient, but politic in rendering us independent of foreign 
nations." 



6Q CLAY ON THE AMERICAN SYSTEM. 

The legislature, not being competent to afford the most 
efficacious aid, by imposing duties on foreign rival articles, 
proceeded to incorporate a company. 

Peace, under the treaty of Ghent, returned in 1815, but 
there did not return with it the golden days which preceded 
the edicts leveled at our commerce by Great Britain ai\d 
France. It found all Europe tranquilly resuming the arts 
and business of civil life. It found Europe no longer the 
consumer of our surplus, and the employer of our naviga- 
tion, but excluding, or heavily burthening, almost all the 
productions of our agriculture, and our rivals in manu- 
factures, in navigation, and in commerce. It found our 
country, in short, in a situation totally different from all the 
past — new and untried. It became necessary to adapt our 
laws, and especially our laws of impost, to the new circum- 
stances in which we found ourselves. Accordingly, that 
eminent and lamented citizen, then at the head of the 
treasury (Mr. Dallas), was required, by a resolution of the 
House of Representatives, under date the twenty-third day 
of February, 1815, to prepare and report to the succeeding 
session of Congress, a system of revenue conformable with 
the actual condition of the country. He had the circle of 
a whole year to perform the work, consulted merchants, 
manufacturers, and other practical men, and opened an 
extensive correspondence. The report which he made at 
the session of 1816, was the result of his inquiries and 
reflections, and embodies the principles which he thought 
applicable to the subject. It has been said, that the tariff 
of 1816 was a measure of mere revenue, and that it only 
reduced the war duties to a peace standard. It is true that 
the question then was, how much and in what way should 
the double duties of the war be reduced? Now, also, the 
question is, on what articles shall the duties be reduced so 
as to subject the amounts of the future revenue to the 
wants of the government? Then it was deemed an inquiiy 



CLAY ON THE AMERICAN SYSTEM. 67 

of the first importance, as it should be now, how the reduc- 
tion should be made, so as to secure proper encouragement 
to our domestic industry. -That this was a leading object in 
the arrangement of the tariff of 1816, I well remember, 
and it is demonstrated by the language of Mr. Dallas. He 
says in his report: 

" There are few, if any, governments which do not regard 
the establishment of domestic manufactures as a chief object 
of public policy. The United States have always so regarded 
it. The demands of the country, while the acquisitions of 
suppHes from foreign nations was either prohibited or im- 
practicable, may have afforded sufficient inducement for this 
investment of capital, and this application of labor; but the 
inducement, in its necessary extent, must fail when the day 
of competition returns. Upon that change in the condition 
of the country, the preservation of the manufactures, which 
private citizens under favorable auspices have constituted 
the property of the nation, becomes a consideration of gen-» 
eral policy, to be resolved by a recollection of past embar- 
rassments; by the certainty of an increased difficulty of 
reinstating, upon any emergency, the manufactures which 
shall be allowed to perish and pass away," etc. 

The measure of protection which he proposed was not 
adopted, in regard to some leading articles, and there was 
great difficulty in ascertaining what it ought to have been. 
But the principle was then distinctly asserted and fully 
sanctioned. 

The subject of the American system was again brought 
up in 1820, by the bill reported by the chairman of the com- 
mittee of manufactures, now a member of the bench of the 
Supreme Court of the United States, and the principle was 
successfully maintained by the representatives of the people; 
but the bill which they passed was defeated in the Senate. 
It was revived in 1824; the whole ground carefully and 
deliberately explored, and the bill then introduced, receiving 



68 CLAY ON THE AMERICAN SYSTEM. 

all the sanctions of the Constitution, became the law of the 
land. An amendment of the system was proposed in 1828, 
to the history of which I refer with no agreeable recollec- 
tions. The bill of that year, in some of its provisions, was 
framed on principles directly adverse to the declared wishes 
of the friends of the policy of protection. I have heard, 
without vouching for" the fact, that it was so framed upon 
the advice of a prominent citizen, now abroad, with the view 
of ultimately defeating the bill, and with assurances that, 
being altogether unacceptable to the friends of the Ameri- 
can system, the bill would be lost. Be that as it may, the 
most exceptional features of the bill were stamped upon it, 
against the earnest remonstrances of the friends of the sys- 
tem, by the votes of southern members, upon a principle, I 
think, as unsound in legislation as it is reprehensible in 
ethics. The bill was passed, notwithstanding all this, it 
having been deemed better to take the bad along with the 
good which it contained, than reject it altogether. Subse- 
quent legislation has corrected the error then perpetrated, 
but still that measure is vehemently denounced by gentle- 
men who contributed to make it what it was. 

Thus, sir, has this great system of protection been gradu- 
ally built, stone upon stone, and step by step, from the fourth 
of July, 1789, down to the present period. In every stage 
of its progress it has received the deliberate sanction of 
Congress. A vast majority of the people of the United 
States has approved and continue to approve it. Every chief 
magistrate of the United States, from Washington to the 
present, in some form or other, has given to it the authority 
of his name; and however the opinions of the existing 
President are interpreted south of Mason and Dixon's line, 
on the north they are at least understood to favor the estab- 
lishment of a judicious tariff. 

The question, therefore, which we are now called upon to 
determine, is not whether we shall establish a new and 



CLAY ON THE AMERICAN SYSTEM. 69 

"" ^ ^^ • 

doubtful system of policy, just proposed, and for the first 
time presented, to our consideration, but whether we shall 
break down and destroy a long-established system, patiently 
and carefully built up and sanctioned, during a series of 
years, again and again, by the nation and its highest and 
most revered authorities. Are we not bound deliberately 
to consider whether we can proceed to this work of destruc- 
tion without a violation of the public faith? The people of 
the United States have justly supposed that the policy of 
protecting their industry against foreign legislation and 
foreign industry was fully settled, not by a single act, but by 
repeated and deliberate acts of government, performed at 
distant and frequent intervals. In full confidence that the 
policy was firmly and unchangeably fixed, thousands upon 
thousands have invested their capital, purchased a vast 
amount of real and other estate, made pertnanent establish- 
ments, and accommodated their industry. Can we expose 
to utter and irretrievable ruin this countless multitude, 
without justly incurring the reproach of violating the 
national faith? 

Such are the origin, duration, extent, and sanctions of the 
policy which we are now called upon to subvert. Its bene- 
ficial effects, although they may vary in degree, have been 
felt in all parts of the Union. To none, I verily believe, 
has it been prejudicial. In the North, everywhere, testi- 
monials are borne to the high prosperity which it has dif- 
fused. There, all branches of industry are animated and 
flourishing. Commerce, foreign and domestic, active; cities 
and towns springing up, enlarging, and beautifying; naviga- 
tion fully and profitably employed, and the whole face of 
the country smiling with improvement, cheerfulness, and 
abundance. 

When gentlemen have succeeded in their design of an 
immediate or gradual destruction of the American system. 
what is their substitute? Free trade! Free trade! The call 



70 CLAY ON THE AMERICAN SYSTEM. 

for free trade is as unavailing as tlie cry of a spoiled child, 
in its nurse's arms, for the moon, or the stars that glitter in 
the firmament of heaven. It never has existed, it never 
will exist. Trade implies at least two parties. To be free, 
it should be fair, equal, and reciprocal. But if we throw 
our ports wide open to the admission of foreign productions, 
free of all duty, what ports of any other foreign nation shall 
we find open to the free admission of our surplus products? 
We may break down all barriers to free trade on our part, 
but the work will not be complete until foreign powers shall 
have removed theirs. There would be freedom on one side, 
and restrictions, prohibitions, and exclusions on the other. 
The bolts, and the bars, and the chains of all other nations will 
remain undisturbed. It is, indeed, possible, that our indus- 
try and commerce would accommodate themselves to this 
unequal and unjust state of things; for, such is the flexi- 
bility of our nature, that it bends itself to all circumstances. 
The wretched prisoner incarcerated in a jail, after a long 
time becomes reconciled to his solitude, and regularly notches 
down the passing days of his confinement. 

Gentlemen deceive themselves. It is not free trade that 
they are recommending to our acceptance. It is, in effect, 
the British colonial system that we are invited to adopt ; and, 
if their policy prevail, it will lead substantially to the re- 
colonization of these States, under the commercial dominion 
of Great Britain. And whom do we find some of the prin- 
cipal supporters, out of Congress, of this foreign system? 
Mr. President, there are some foreigners who always remain 
exotics, and never become naturalized in our country; while, 
happily, there are many others who readily attach themselves 
to our principles and our institutions. The honest, patient, 
and industrious German readily unites with our people, 
establishes himself upon some of our fat land, fills his capa- 
cious barn, and enjoys in tranquility the abundant fruits which 
his diligence gathers around him, always ready to fly to the 



CLAY ON THE AMERICAN SYSTEM. 71 

standard of his adopted country, or of its laws, when called 
by the duties of patriotism. The gay, the versatile, the 
philosophic Frenchman, accommodating himself cheerfully 
to all the vicissitudes of life, incorporates himself without 
difficulty in our society. But, of all foreigners, none amal- 
gamate themselves so quickly with our people as the natives 
of the Emerald Isle. In some of the visions which have 
passed through my imagination, I have supposed that Ire- 
land was originally part and parcel of this continent, and 
that, by some extraordinary convulsion of nature, it was 
torn from America, and drifting across the ocean, was 
placed in the unfortunate vicinity of Great Britain. The 
same open-heartedness; the same generous hospitality; the 
same careless and uncalculating indifference about human 
hfe, characterize the inhabitants of both countries. Ken- 
tucky has been sometimes called the Ireland of America. 
And I have no doubt, that if the current of emigration 
were reversed, and set from America upon the shores of 
Europe, instead of bearing from Europe to America, every 
American emigrant to Ireland would there find, as every 
Irish emigrant here finds, a hearty welcome and a happy 
home! 

But I have said that the system nominally called "free 
trade," so earnestly and eloquently recommended to our 
adoption, is a mere revival of the British colonial system, 
forced upon us by Great Britain during the existence of our 
colonial vassalage. The whole system is fully explained and 
illustrated in a work pubhshed as far back as the year 1750, 
entitled " The Trade and Navigation of Great Britain Con- 
sidered by Joshua Gee," with extracts from which I have 
been furnished by the dihgent researches of a friend. It 
will be seen from these, that the South Carolina policy now 
IS identical with the long- cherished policy of Great Britain, 
which remains the same as it was when the thirteen colonies 
were part of the British empire. 



72 CLAY ON THE AMERICAN SYSTEM. 

I regret, Mr. President, that one topic has, I think, 
unnecessarily been introduced into this debate. I allude to 
the charge brought against the manufacturing system, as 
favoring the growth of aristocracy. If it were true, would 
gentlemen prefer supporting foreign accumulations of w^ealth, 
by that description of industry, rather than in their own 
country? But is it correct? The joint stock companies of 
the North, as I understand them, are nothing more than 
associations, sometimes of hundreds, by means of which the 
small earnings of many are brought into a common stock, 
and the associates, obtaining corporate privileges, are enabled 
to prosecute, under one superintending head, their business 
to better advantage. Nothing can be more essentially 
democratic or better devised to counterpoise the influence 
of individual wealth. In Kentucky, almost every manufac- 
tory known to me is in the hands of enterprising and self- 
made men, who have acquired whatever wealth they possess 
by patient and diligent labor. Comparisons are odious, and 
but in defense, would not be made by me. But is there 
more tendency to aristocracy in a manufactory supporting 
hundreds of freemen, or in a cotton plantation, with its not 
less numerous slaves, sustaining perhaps only two white 
families — that of the master and overseer? 

I pass, with pleasure, from this disagreeable topic, to two 
general propositions, which cover the entire ground of debate. 
The first is, that under the operation of the American sys- 
tem, the objects which it protects and fosters are brought to 
the consumer at cheaper prices than they commanded prijDr 
to its introduction, or, than they would command if it did 
not exist. If that be true, ought not the country to be con- 
tented and satisfied with the system, unless the second propo- 
sition, which I mean presently also to consider, is unfounded? 
And that is, that the tendency of the system is to sustain, 
and that it has upheld the prices of all our agricultural and 
other produce, including cotton. 



CLAY ON THE AMERICAN SYSTEM. 73 

And is the fact not indisputable, that all essential objects 
of consumption affected by the tariff, are cheaper and better 
since the act of 1824, than they were for several years prior 
to that law? I appeal for its truth to common observation, 
and to all practical men. I appeal to the farmer of the coun- 
try, whether he does not purchase on better terms his iron, 
salt, brown sugar, cotton goods, and woolens, for his labor- 
ing people? And I ask the cotton planter if he has not been 
better and more cheaply supphed with his cotton bagging? 
In regard to this latter article, the gentleman from South 
Carolina was mistaken in supposing that I complained that, 
under the existing duty the Kentucky manufacturer could 
not compete with the Scotch. The Kentuckian furnishes a 
more substantial and cheaper article, and at a more uniform 
and regular price. But it was the frauds, the violation of 
law, of which I did complain ; not smuggling, in the com- 
mon sense of that practice, which has something bold, dar- 
ing, and enterprising in it, but mean, barefaced cheating, by 
fraudulent invoices and false denomination. 

I plant myself upon this fact, of cheapness and superiority, 
as upon impregnable ground. Gentlemen may tax their 
ingenuity and produce a thousand speculative solutions to 
the fact, but the fact itself will remain undisturbed. 

This brings me to consider what I apprehend to have been 
the most efficient of all the causes in the reduction of the 
prices of manufactured articles — and that is competition. 
By competition, the total amount of the supply is increased, 
and by increase of the supply, a competition in the sale ensues, 
and this enables the consumer to buy at lower rates. Of all 
human powers operating on the affairs of mankind, none is 
greater than that of competition. It is action and re-action. 
It operates between individuals in the same nation, and be- 
tween different nations. It resembles the meeting of the 
mountain torrent, grooving by its precipitous motion, its own 
channel, and ocean's tide. Unopposed, it sweeps everything 



74 CLAY ON THE AMERICAN SYSTEM. 

before it ; but, counterpoised, the waters become calm, safe, 
and regirlar. It is like tlie segments of a circle or an arch ; 
taken separately, each is nothing ; but in their combination 
they produce efficiency, symmetry, and perfection. By the 
American system, this vast power has been excited in 
America, and brought into being to act in co-operation and 
collision with European industry. Europe acts within itself, 
and with America ; and America acts within itself, and with 
Europe. The consequence is, the reduction of prices in both 
hemispheres. Nor is it fair to argue from the reduction of 
prices in Europe, to her own presumed skill and labor, exclu- 
sively. We affect her prices, and she affects ours. This must 
always be the case, at least in reference to any articles as to 
which there is not a total non -intercourse ; and if our indus- 
try, by diminishing the demand for her supplies, should pro- 
duce a diminution in the price of those supplies, it would be 
very unfair to ascribe that reduction to her ingenuity instead 
of placing it to the credit of our own skill and excited 
industry. 

The great law of price is determined by supply and de- 
mand. Whatever affects either, affects the price. If the 
supply is increased, the demand remaining the same, the price 
declines ; if the demand is increased, the supply remaining 
the same, the price advances ; if both supply and demand 
are undiminished, the price is stationary, and the price is 
influenced exactly in proportion to the degree of disturbance 
to the demand or supply. It is therefore a great error to 
suppose that an existing or new duty necessarily becomes a 
component element to its exact amount of price. If the 
proportion of demand and supply are varied by the duty, 
either in augmenting the supply, or diminishing the demand, 
or vice versa, price is affected to the extent of that variation. 
But the duty never becomes an integral part of the price, 
except in the instances where the demand and the supply 
remain after the duty is imposed, precisely what they were 



CLAY ON THE AMERICAN SYSTEM. 75 

before, or the demand is increased, and the supply remains 
stationary. 

Competition, therefore, wherever existing, whether at 
home or abroad, is the parent cause of cheapness. If a high 
duty excites production at home, and the quantity of the 
domestic article exceeds the amount which had been pre- 
. viously imported the price will fall. This accounts for an 
extraordinary fact stated by a Senator from Missouri. Three 
cents were laid as a duty upon a pound of lead, by the act 
of 1828. The price at Galena, and the other lead mines, 
afterwards fell to one and a half cents per pound. Now it 
is obvious that the. duty did not, in this case, enter into the 
price: for it was twice the amount of the price. What pro- 
duced the fall ? It was stimulated production at home, excited 
by the temptation of the exclusive possession' of the home 
market. This state of things could not last. Men would 
not continue an unprofitable pursuit; some abandoned the 
business, or the total quantity produced was diminished, and 
living prices have been the consequence. But, break down 
the domestic supply, place us again in a state of dependence 
on the foreign source, and can it be doubted that we should 
ultimately have to supply ourselves at dearer rates? It is 
not fair to credit the foreign market with the depression of 
prices produced there by the influence of our competition. 
Let the competition be withdrawn, and their prices would 
instantly rise. 

But, it is argued that if, by the skill, experience, and per- 
fection which we have acquired in certain branches of 
manufacture, they can be made as cheap as similar articles 
abroad, and enter fairly i-nto competition with them, why 
not repeal the duties as to those articles? And why should 
we? Assuming the truth of the supposition the foreign 
article would not be introduced in the regular course of 
trade, but would remain excluded by the possession of the 
home market, which the domestic article had obtained. The 



76 CLAY ON THE AMERICAN SYSTEM. 

repeal, therefore, would have no legitimate effect. But 
might not the foreign article be imported in vast quantities, 
to glut our markets, break down our establishments, and 
ultimately to enable the foreigner to monopolize the supply 
of our consumption? America is the greatest foreign market 
for European manufactures. It is that to which European 
attention is constantly directed. If a great house becomes 
bankrupt there, its storehouses are emptied, and the goods 
are shipped to America, where, in consequence of our 
auctions, and our custom-house credits, the greatest facilities 
are afforded in the sale of them. Combinations among 
manufacturers might take place, or even the operations of 
foreign governments might be directed to the destruction of 
our establishments. A repeal, therefore, of our protecting 
duty, from some one or all of these causes, would be followed 
by flooding the country with the foreign fabric, surcharging 
the market, reducing the price, and a complete prostration 
of our manufactories; after which the foreigner would 
leisurely look about to indemnify himself in the increased 
prices which he would be enabled to command by his 
monopoly of the supply of our consumption. "What 
American citizen, after the government had displayed this 
vacillating policy, would be again tempted to place the 
smallest confidence in the pubhc faith, and adventure once 
more in this branch of industry? 

Gentlemen have allowed to the manufacturing portions of 
the community no peace; they have been constantly threat- 
ened with the overthrow of the American System. From 
the year 1820, if not from 1816, down to this time, they 
have been held in a condition of constant alarm and 
insecurity. Nothing is more prejudicial to the great interests 
of a nation than unsettled and varpng policy. Although 
every appeal to the national legislature has been responded 
to in conforaiity with the wishes and sentiments of the great 
majority of the people, measures of protection have only 



CLAY ON THE AMERICAN SYSTEM. 77 

been carried by such small majorities as to excite hopes on 
the one hand, and fears on the other. Let the country 
breathe, let its vast resources be developed, let its energies 
be fully put forth, let it have tranquility, and my word for 
it, the degree of perfection in the arts which it will exhibit 
will be greater than that which has been presented, astonish- 
ing as our progress has been. Although some branches of 
our manufactures might, and in foreign markets now do, 
fearlessly contend with similar foreign fabrics, there are 
many others yet in their infancy, struggling with the diffi- 
culties which encompass them. We should look at the 
whole system, and recollect that time, when we contemplate 
the great movements of a nation, is very different from the 
short period which is allotted for the duration of individual 
life. The honorable gentleman from South Carolina well 
and eloquently said, in 1824, -'No great interest of any 
country ever yet grew up in a day; no new branch of 
industry can become firmly and profitably estabhshed but in 
a long course of years ; every thing, indeed, great or good, 
is matured by slow degrees: that which attains a speedy 
maturity is of small value, and is destined to a brief exist- 
ence. It is the order of Providence, that powers gradually 
developed shall alone attain permanency and perfection. 
Thus must it be with our national institutions, and national 
character itself." 

I feel most sensibly, Mr. President, how much I have 
trespassed upon the Senate. My apology is a deep and 
deliberate conviction, that the great cause under debate 
involves the prosperity and the destiny of the Union. But 
the best requital I can make, for the friendly indulgence 
which has been extended to me by the Senate, and for 
which I shall ever retain sentiments of lasting gratitude, is 
to proceed with as little delay as practicable, to the conclu- 
sion of a discourse which has not been more tedious to the 
Senate than exhausting to me. I have now to consider the 



78 CLAY ON THE AMERICAN SYSTEM. 

remaining of the two propositions wliicli I have already 
announced. That is: 

Secondly. That under the operation of the American 
system, the products of our agriculture command a higher 
price than they would do without it, by the creation of a 
home market; and by the augmentation of wealth produced 
by manufacturing industry, which enlarges our powers of 
consumption, both of domestic and foreign articles. The 
importance of the home market is among the established 
maxims which are universally recognized by all writers and 
all men. However ^ome may differ as to the relative 
advantages of the foreign and the home market, none deny 
to the latter great value and high consideration. It is nearer 
to us; beyond the control of foreign legislation; and undis- 
turbed by those vicissitudes to which all international inter- 
course is more or less exposed. The most stupid are sensible 
of the benefit of a residence in the vicinity of a large manu- 
factory, or of a market town, of a good road, or of a 
navigable stream, which connects their farms with some 
great capital. If the pursuits of all men were perfectly the 
same, although they would be in possession of the greatest 
abundance of the particular produce of their industry, they 
might, at the same time, be in extreme want of other neces- 
sary articles of human subsistence. The uniformity of the 
general occupation would preclude all exchanges, all com- 
merce. It is only in the diversity of the vocations of the 
members of a community that the means can be found for 
those salutary exchanges which conduce to the general 
prosperity. And the greater that diversity, the more exten- 
sive and the more animating is the circle of exchange. 
Even if foreign markets were freely and widely open to the 
reception of our agricultural produce, from its bulky nature, 
and the distance of the interior, and the dangers of the 
ocean, large portions of it could never profitably reach the 
foreign market. But let us quit this field of theory, clear 



CLAY ON THE AMERICAN SYSTEM. 79 

as it is, and look at the practical operation of the system of 
protection, beginning with the most valuable staple of our 
agriculture. 

But if all this reasoning were totally fallacious — if the 
price of manufactured articles were really higher, under the 
American system, than without it, I should still argue that 
high or low prices were themselves relative — relative to the 
ability to pay them. It is in vain to tempt, to tantalize us 
with the lower prices of European fabrics than our own, if 
we have nothing wherewith to purchase them. If, by the 
home exchanges, we can be supplied with necessary, even if 
they are dearer and worse, articles of American production 
than the foreign, it is better than not to be supplied at all. 
And how would the large portion of our country which I 
have described be supplied, but for the home exchanges? 
A poor people, destitute of wealth or of exchangeable com- 
modities, has nothing to purchase foreign fabrics. To them 
they are equally beyond their reach, whether their cost be a 
dollar or a guinea. It is in this view of the matter that 
Great Britain, by her vast wealth — her excited and protected 
industry — is enabled to bear a burden of taxation which, 
when compared to that of other nations, appears enormous; 
but which, when her immense riches are compared to theirs, 
is light and trivial. The gentleman from South CaroUna 
has drawn a lively and flattering picture of our coasts, bays, 
rivers, and harbors; and he argues that these proclaimed 
the design of Providence, that we should be a commercial 
people. I agree with him. We differ only as to the means. 
He would cherish the foreign, and neglect the internal trade. 
I would foster both. What is navigation without ships, or 
ships without cargoes? By penetrating the bosoms of our 
mountains, and extracting from them their precious treas- 
ures; by cultivating the earth, and securing a home market 
for its rich and abundant products; by employing the water 
power with which we are blessed; by stimulating and 



80 CLAY ON THE AMERICAN SYSTEM. 

protecting our native industry, in all its forms; we shall but 
nourish and promote the prosperity of commerce, foreign 
and domestic. 

I have hitherto considered the question in reference only 
to a state of peace; but a season of war ought not to be 
entirely overlooked. We have enjoyed near twenty years 
of peace; but who can tell when the storm of war shall 
again break forth? Have we forgotten so soon, the priva- 
tions to which not merely our brave soldiers and our gallant 
tars were subjected, but the whole community, during the 
last war, for the want of absolute necessaries? To what an 
enormous price they rose! And how inadequate the supply 
was, at any price! The statesman who justly elevates his 
views, will look behind, as well as forward, and at the exist- 
ing state of things; and he will graduate the policy which 
he recommends, to all the probable exigencies which may 
arise in the Republic. Taking this comprehensive range, it 
would be easy to show that the higher prices of peace, if 
prices were higher in peace, were more than compensated by 
the lower prices of war, during which supplies of all essen- 
tial articles are indispensable to its vigorous, effectual, and 
glorious prosecution. I conclude this part of the argument 
with the hope that my humble exertions have not been 
altogether unsuccessful in showing — 

1. That the policy which we have been considering ought 
to continue to be regarded as the genuine American system. 

2. That the free trade system, which is proposed as 
its substitute, ought really to be considered as the British 
Colonial system. 

3. That the American system is beneficial to all parts of 
the Union, and absolutely necessary to much the larger 
portion. 

4. That the price of the great staple of cotton, and of 
all our chief productions of agriculture, has been sustained 
and upheld, and a decline averted by the protective system. 



CLAY ON THE AMERICAN SYSTEM. 81 

5. That if the foreign demand for cotton has been at all 
diminished by the operation of that system, the diminution 
has been more than compensated in the additional demand 
created at home. 

6. That the constant tendency of the system, by creating 
competition among ourselves, and between American and 
European industry, reciprocally acting upon each other, is 
to reduce prices of manufactured objects. 

7. That in point of fact, objects within the scope of the 
policy of protection have greatly fallen in price. 

8. That if, in a season of peace, these benefits are 
experienced, in a season of war, when the foreign supply 
might be cut off, they would be much more extensively felt. 

9. And finally, that the substitution of the British colo- 
nial system for the American system, without benefiting 
any section of the Union, by subjecting us to a foreign 
legislation, regulated by foreign interests, would lead to the 
prostration of our manufactures, general impoverishment, 
and ultimate ruin. 

The danger to our Union does not lie on the side of persist- 
ence in the American system, but on that of its abandon- 
ment. If, as I have supposed and believe, the inhabitants 
of all north and east of James river, and all west of the 
mountains, including Louisiana, are deeply interested in the 
preservation of that system, would they be reconciled to 
its overthrow? Can it be expected that two-thirds, if not 
three-fourths, of the people of the United States, would 
consent to the destruction of a policy, believed to be indis- 
pensably necessary to their prosperity? When, too, the 
sacrifice is made at the instance of a single interest, which 
they verily believe will not be promoted by it? In estimating 
the degree of peril which may be incident to two opposite 
courses of human policy, the statesman would be short- 
sighted who should content himself with viewing only the 
evils, real or imaginary, which belong to that course which 
is in practical operation. He should lift himself up to the 
4* 



82 CLAY ON THE AMERICAN SYSTEM. 

contemplation of those greater and more certain dangers 
whicti might inevitably attend the adoption of the alterna- 
tive course. What would be the condition of this Union, 
if Pennsylvania and New York, those mammoth members of 
our confederacy, were firmly persuaded that their industry 
was paralyzed, and their prosperity blighted, by the enforce- 
ment of the British colonial system, under the delusive name 
of free trade? They are now tranquil and happy, and con- 
tented, conscious of their welfare, and feeling a salutary and 
rapid circulation of the products of home manufactures and 
home industry throughout all their great arteries. But let 
that be checked, let them feel that a foreign system is to 
predominate, and the sources of their subsistence and com- 
'fort dried up; let New England and the west, and the 
middle States, all feel that they too are the victims of a 
mistaken policy, and let these vast portions of our country 
despair of any favorable change, and then indeed might we 
tremble for the continuance and safety of this Union! 

And now, sir, I would address a few words to the friends 
of the American system in the Senate. The revenue must 
— ought to be reduced. The country will not, after, by the 
payment of the public debt, ten or twelve millions of dollars 
become unnecessary, bear such an annual surplus. Its 
distribution would form a subject of perpetual contention. 
Some of the opponents of the system understand the strata- 
gem by which to attack it, and are shaping their course 
accordingly. It is to crush the system by the accumulation 
of revenue, and by the effort to persuade the people that 
they are unnecessarily taxed, while those would really tax 
them who would break up the native sources of supply, and 
render them dependent upon the foreign. But the revenue 
ought to be reduced, so as to accommodate it to the fact of 
the payment of the public debt. And the alternative is or 
may be, to preserve the protecting system, and repeal the 
duties on the unprotected articles, or to preserve the duties 
on unjjTotcctcd articles, and endanger if not destroy the sys- 



CLAY ON THE AMERICAN SYSTEM. 83 

tern. Let us then adopt the measure before us, which will 
benefit all classes; the farmer, the professional man, the 
merchant, the manufacturer, the mechanic; and the cotton 
planter more than all. A few months ago there was no 
diversity of opinion as to the expediency of this measure. 
All, then, seemed to unite in the selection of these objects 
for a repeal of duties which were not produced within the 
country. Such a repeal did not touch our domestic industry, 
violated no principle, offended no prejudice. 

Can we not all, whatever may be our favorite theories, 
cordially unite on this neutral ground? When that is occu- 
pied, let us look beyond it, and see if anything can be done 
in the field of protection, to modify or improve it, or to 
satisfy those who are opposed to the system. Our southern 
brethren believe that it is injurious to them, and ask its 
repeal. We believe that its abandonment will be prejudicial 
to them, and ruinous to every other section of the Union. 
However strong their convictions may be, they are not 
stronger than ours. Between the points of the preservation 
of the system and its absolute repeal, there is no principle 
of union. If it can be shown to operate immoderately on 
any quarter — if the measure of protection to any article can 
be demonstrated to be undue and inordinate, it would be the 
duty of Congress to interpose and apply a remedy. And 
none will co-operate more heartily than I shall in the per- 
formance of that duty. It is quite probable that beneficial 
modifications of the system may be made without impairing 
its efficacy. But to make it fulfill the purposes of its institu- 
tion, the measure of protection ought to be adequate. If it 
be not, all interests will be injuriously affected. The manu- 
facturer, crippled in his exertions, will produce less perfect 
and dearer fabrics, and the consumer will feel the conse- 
quence. This is the spirit, and these are the principles 
only, on which, it seems to me, that a settlement of the 
great question can be made, satisfactorily to all parts of our 
Union. 



CHAPTER V. 

PROTECTION AND FREE TRADE. 
By John Stuart Mill. 



OP INTERFERENCES OF GOVERNMENT GROUNDED ON ERRONEOUS 
THEORIES. 

FROM the necessary functions of government, and the 
effects produced on the economical interests of society 
by their good or ill discharge, we proceed to the fmictions 
which belong t(f what I have termed, for want of a better 
designation, the optional class; those which are sometimes 
assumed by governments and sometimes not, and which it is 
not unanimously admitted they ought to exercise. 

Before entering on the general principles of the question, 
it will be advisable to clear from our path all those cases, in 
which government interference works ill, because grounded 
on false views of the subject interfered with. Such cases 
have no connection with any theory respecting the proper 
limits of interference. There are some things with which 
governments ought not to meddle, and other things with 
which they ought; but whether right or wrong in itself, the 
interference must work for ill, if government, not under- 
standing the subject which it meddles with, meddles to bring 
about a result which would be mischievous. We will there- 
fore begin by passing in review various false theories, which 
have from time to time formed the ground of acts of gov- 
ernment more or less economically injurious. 

Former writers on Political Economy have found it need- 

(84) 



PROTECTIONISM. 85 



ful to devote mucli trouble and space to this department of 
their subject. It has now happily become possible, at least 
in our own country, greatly to abridge this purely negative 
part of our discussions. The false theories of Political 
Economy which have done so much mischief in times past, 
are entirely discredited among all who have not lagged 
behind the general progress of opinion; and few of the 
enactinents which were once grounded on those theories, 
still liclp to deform the statute book. As the principles on 
which their condemnation rests, have been fully set forth in 
other parts of this treatise, we may here content ourselves 
with a few brief indications. 

OF THESE FALSE THEORIES, THE MOST NOTABLE IS THE DOC- 
TRINE OF PROTECTION TO NATIVE INDUSTRY. 

A phrase meaning the prohibition, or the discouragement 
by heavy duties, of such foreign commodities as are capable 
of being produced at home. If the theory involved in this 
system had been correct, the practical conclusions grounded 
on it would not have been unreasonable. The theory was, 
that to buy things produced at home was a national benefit, 
and the introduction of foreign commodities, generally a 
national loss. It being at the same time evident that the 
interest of the consumer is to buy foreign commodities in 
preference to domestic whenever they are either cheaper or 
better, the interest of the consumer appeared in this respect 
to be contrary to the public interest; he was certain, if left 
to his own inclinations, to do what according to the theory 
was injurious to the public. 

It was shown, however, in our analysis of the effects of 
international trade, as it had been often shown by former 
writers, that the importation of foreign commodities in the 
common course of traffic, never takes place, except when it 
is, economically speaking, a national good, by causing the 
same amount of commodities to be obtained at a smaller 



86 PROTECTIONISM. 



cost of labor and capital to the country. To prohibit, there- 
fore, this importation; or impose duties which prevent it, is 
to render the labor and capital of the country less efficient 
in production than they would otherwise be; and compel a 
waste, of the difference between the labor and capital nec- 
essary for the home production of the commodity, and that 
which is required for producing the things with which it can 
be purchased from abroad. The amount of national loss 
thus occasioned is measured by the excess of the price at 
which the commodity is produced, over that at which it 
could be imported. In the case of manufactured goods, the 
whole difference between the two prices is absorbed in 
indemnifying the producers for waste of labor, or of the 
capital which supports that labor. Those who are supposed 
to be benefited, namely, the makers of the protected articles 
(unless they form an exclusive company, and have a monop- 
oly against their own countrymen as well as against foreign- 
ers), do not obtain higher profits than other people. All is 
sheer loss to the country as well as to the consumer. When 
the protected article is a product of agriculture — the waste 
of labor not being incurred on the whole produce, but only 
on what may be called the last installment of it — the extra 
price is only in part an indemnity for waste, the remainder 
being a tax paid to the landlords. 

The restrictive and prohibitory policy was originally 
grounded on what is called the mercantile system, which, 
representing the advantages of foreign trade to consist 
solely in bringing money into the country, gave artificial 
encouragement to exportation of goods, and discountenanced 
their importation. The only exceptions to the system were 
those required by the system itself. The materials and 
instruments of production were the subjects of a contrary 
policy, directed however to the same end; they were freely 
imported, and not permitted to be exported, in order that 
manufacturers, being more cheaply supplied with the requi- 



PROTECTIONISM. 87 



sites of manufacture, might be able to sell cheaper, and, 
therefore, to export more largely. For a similar reason, 
importation was allowed and even favored, when confined 
to the productions of countries which were supposed to take 
from the country still more than it took from them, thus 
enriching it by a favorable balance of trade. As part of 
the same system, colonies were founded, for the supposed 
advantage of compelling them to buy our commodities, or 
at all events not to buy those of any other country; in 
return for which restrictions, we were generally wilhng to 
come under an equivalent obligation with respect to the 
staple productions of the colonists. The consequences of 
the theory were pushed so far, that it was not unusual even 
to give bounties on exportation, and induce foreigners to 
buy from us rather than from other countries, by a cheap- 
ness which we artificially produced, by paying part of the 
price for them out of our own taxes. This is a stretch 
beyond the point yet reached by any private tradesman 
in his competition for business. No shop-keeper, I should 
think, ever made a practice of bribing customers by selling 
goods to them at a permanent loss, making it up to him- 
seK from other funds in his possession. 

Tlie principle of the mercantile theory is now given up 
even by writers and governments who still cling to the re- 
strictive system. Whatever hold that system has over men's 
minds, independently of the private interests exposed to 
real or apprehended loss by its abandonment, is derived 
from fallacies other than the old notion of the benefits of 
heaping up money in the country. The most effective of 
these is the specious plea of employing our own countr3rtnen 
and our national industry, instead of feeding and supporting 
the industry of foreigners. The answer to this is evident. 
Without reverting to the fundamental theorem respecting 
the nature and sources of employment for labor, it is suf- 
ficient to say, what has usually been said by the advocates 



PROTECTIONISM. 



of free trade, that the alternative is not between employing 
our own people and foreigners, but between employing one 
class and other of our own people. The imported com- 
modity is always paid for, directly or indirectly, with the 
produce of our own industry; that industry being, at the 
same time, rendered more productive, since, with the same 
labor and outlay, we are enabled to possess ourselves of a 
greater quantity of the article. Those who have not well 
considered the subject are not apt to suppose that our export- 
ing an equivalent in our own produce, for the foreign articles 
we consume, depends on contingencies — on the consent of 
foreign countries to make some corresponding relaxation of 
their own restrictions, or on the question whether those 
from whom we buy are induced by that circumstance to buy 
more from us; and that, if these things, or things equivalent 
to them, do not happen, the payment must be made in 
money. Now, in the first place, there is nothing more objec- 
tionable in a money payment than in payment by any other 
medium, if the state of the market makes it the most 
advantageous remittance; and the money itself was first 
acquired, and would again be replenished, by the export of 
an equivalent value of our own products. But, in the next 
place, a very short interval of paying in money would so 
lower prices as either to stop a part of the importation, or 
raise up a foreign demand for our produce, sufficient to pay 
for the imports. I grant that this disturbance of the equa- 
tion of international demand would be in some degree to 
our disadvantage in the purchase of other imported articles; 
and that a country which prohibits some foreign commodi- 
ties, does, cceteris paribus, obtain those which it does not 
prohibit, at a less price than it would otherwise have to pay. 
To express the same thing in other words: a country which 
destroys or prevents altogether cejrtain branches of foreign 
trade, thereby annihilating a general gain to the world, 
which would be shared in some proportion between itself and 



PROTECTIONISM. 



other countries, does, in some circumstances, draw to itself, 
at the expense of foreigners, a larger share than would else 
belong to it of the gain arising from that portion of its 
foreign trade which it suffers to subsist. But even this it 
can only be enabled to do, if foreigners do not maintain 
equivalent prohibitions or restrictions against its commodi- 
ties. In any case, the justice or expediency of destroying 
one of two gains, in order to engross a rather larger share 
of the other, does not require much discussion; the gain, 
too, which is destroyed, being, in proportion to the magni- 
tude of the transactions, the larger of the two, since it is the 
one which capital, left to itself, is supposed to seek by 
preference. 

Defeated as a general theory, the protectionist doctrine 
finds support in some particular cases, from considerations 
which, when really in point, involve greater interests than 
mere saving of labor; the interests of national subsistence 
and of national defense. The discussions on the corn laws 
have famiharized everybody with the plea, that we ought to 
be independent of foreigners for the food of the people; 
and the navigation laws were grounded, in theory and pro- 
fession, on the necessity of keeping up a " nursery of sea- 
men " for the navy. On this last subject I at once admit, 
that the object is worth the sacrifice; and that a country 
exposed to invasion by sea, if it cannot otherwise have suf- 
ficient ships and sailors of its own, to secure the means of 
manning on an emergency an adequate fleet, is quite right in 
obtaining those means, even at an economical sacrifice in 
point of cheapness of transport. When the English navi- 
gation laws were enacted, the Dutch, from their maritime 
skill and their low rate of profit at home, were able to carry 
for other nations, England included, at cheaper rates than 
those nations could carry for themselves; which placed all 
other countries at a great comparative disadvantage in ob- 
taining experienced seamen for their ships of war. The 



90 , PROTECTIONISM. 



navigation laws, by which this deficiency was remedied, and 
at the same time a blow struck against the maritime power 
of a nation with which England was then frequently en- 
gaged in hostilities, were probably, though economically 
disadvantageous, politically expedient. But English ships 
and sailors can now navigate as cheaply as those of any 
other country; maintaining at least an equal competition 
with the other maritime nations even in their own trade. 
The ends which may once have justified navigation laws, 
require them no longer, and afforded no reason for main- 
taining this invidious exception to the general rule of free 
trade. 

With regard to subsistence, the plea of the protectionists 
has been so often and so triumphantly met, that it requires 
little notice here. That country is the most steadily, as well 
as the most abundantly, supplied with food, which draws its 
supplies from the largest surface. It is ridiculous to found 
a general system of policy on so improbable a danger as 
that of being at war with all the nations of the world at 
once; or to suppose that, even if inferior at sea, a whole 
country could be blockaded like a town, or that the growers 
of food in other countries would not be as anxious not to 
lose an advantageous market, as we should be not to be de- 
prived of their corn. On the subject, however, of subsis- 
tence, there is one point which deserves more especial con- 
sideration. In cases of actual or apprehended scarcity, 
many countries of Europe are accustomed to stop the expor- 
tation of food. Is this, or not, sound policy? There can be 
no doubt that in the present state of international morality, 
a people cannot, any more than an individual, be blamed 
for not starving itself to feed others. But if the. greatest 
amount of good to mankind on the whole, were the end 
aimed at in the maxims of international conduct, such col- 
lective churlishness would certainly be condemned by them. 
Suppose that in ordinary circumstances the trade in food 



PROTECTIONISM. 91 



were perfectly free, so that the price in one country could 
not habitually exceed that in any other by more than the 
cost of carriage, together with a moderate profit to the im- 
porter. A general scarcity ensues, affecting all countries, 
"but in unequal degrees. If the price rose in one country 
more than in others, it would be a proof that in that country 
the scarcity was severest, and that by permitting food to go 
freely thither from any other country, it would be spared 
from a less urgent necessity to relieve a greater. When the 
interests, therefore, of all countries are considered, free ex- 
portation is desirable. To the exporting country considered 
separately, it may, at least on the particular occasion, be an 
inconvenience; but taking into account that the country 
which is now the giver, will in some future season be the 
receiver, and the one that is benefited by the freedom, I can- 
not but think that even to the apprehension of food-rioters 
it might be made apparent, that in such cases they should 
do to others what they would wish done to themselves. 

In countries in which the system of protection is declin- 
ing, but not yet wholly given up, such as the United States, 
a doctrine has come into notice which is a sort of compro- 
mise between free trade and restriction, namely, that pro- 
tection for protection's sake is improper, but that there is 
nothing objectionable in having as much protection as may 
incidentally result from a tariff framed solely for revenue. 
Even in England, regret is sometimes expressed that a 
" moderate fixed duty " was not preserved on corn, on 
account of the revenue it would yield. Independently, how- 
ever, of the general impolicy of taxes on the necessaries of 
life, this doctrine overlooks the fact, that revenue is received 
only on the quantity imported, but that the tax is paid on 
the entire quantity consumed. To make the public pay 
much that the treasury may receive a little, is not an eligible 
mode of obtaining a revenue. In the case of manufactured 
articles the doctrine involves a palpable inconsistency. The 



92 PROTECTIONISM. 



object of the duty as a means of revenue, is inconsistent 
with its affording, even incidentally, any protection. It can 
only operate as protection in so far as it prevents importa- 
tion; and to whatever degree it prevents importation, it 
affords no revenue. 

THE ONLY CASE IN WHICH, ON MEEE PEINCIPLES OF POLITICAL 
ECONOMY, PEOTECTING DUTIES CAN BE DEFENSIBLE, 

Is when they are imposed temporarily (especially in a 
young and rising nation) in hopes of naturalizing a foreign 
industry, in itself perfectly suitable to the circumstances of 
the country. The superiority of one country over another 
in a branch of production, often arises only from having 
begun it sooner. There may be no inherent advantage on 
one part, or disadvantage on the other, but only a present 
superiority of acquired skill and experience. A country 
which has this skill and experience yet to acquire, may in 
other respects be better adapted to the production than those 
which were earlier in the field; and besides, it is a just re- 
mark of Mr. Rae, that nothing has a greater tendency to 
promote improvements in any branch of production, than its 
trial under a new set of conditions. But it cannot be ex- 
pected that individuals should, at their own risk, or rather 
to their certain loss, introduce a new manufacture, and bear 
the burthen of carrying it on until the producers have been 
educated up. to the level of those with whom the processes 
are traditional. A protecting duty, continued for a reasona- 
ble time, will sometimes be the least inconvenient mode in 
which the nation can tax itself for the support of such an 
experiment. But the protection should be confined to cases 
in which there is good ground of assurance that the industry 
which it fosters will after a time be able to dispense with it; 
nor should the domestic producers ever be allowed to expect 
that it will be continued to them beyond the time necessary 
for a fair trial of what they are capable of accomplishing. 



PROTECTIONISM. 93 



Tlie only writer of any reputation as a political economist, 
who now adheres to the protectionist doctrine, Mr. H. C. 
Carey, rests its defense, in an economic point of view, prin- 
cipally on two reasons. One is, the great saving in cost of 
carriage, consequent on producing commodities at or very 
near to the place where they are to be consumed. The 
whole of the cost of carriage, both on the commodities im- 
ported and on those exported in exchange for them, he 
regards as a direct burthen on the producers, and not, as is 
obviously the truth, on the consumers. On whomsoever it 
falls, it is, without doubt, a burthen on the industry of the 
world. But it is obvious (and that Mr. Carey does not see 
it, is one of the many surprising things in his book) that the 
burthen is only borne for a more than equivalent advantage. 
If the commodity is bought in a foreign country with 
domestic produce in spite of the double cost of carriage, the 
fact proves that, heavy as that cost may be, the saving in 
cost of production outweighs it, and the collective labor of 
the country is on the whole better remunerated than if the 
article were produced at home. Cost of carriage is a natural 
protecting duty, which free trade has no power to abrogate; 
and unless America gained more by obtaining her manufac- 
tures through the medium of her corn and cotton, than she 
loses in cost of carriage, the capital employed in producing 
corn and cotton in annually increased quantities for the for- 
eign market, would turn to manufactures instead. The nat- 
ural advantage attending a mode of industry in which there 
is less cost of carriage to pay, caji at most be only a justifica- 
tion for a temporary and merely tentative protection. The 
expenses of production .being always greatest at first, it may 
happen that the home production, though really the most 
advantageous, may not become so until after a certain dura- 
tion of pecuniary loss, which it is not to be expected that pri- 
vate speculators should incur in order that their successors 
may be benefited by their ruin. I have therefore conceded 



94 PROTECTIONISM. 



that in a new country, a temporary protecting duty may 
sometimes be economically defensible; on condition, how- 
ever, that it be strictly limited in point of time, and provision 
be made that during the latter part of its existence it be on 
a gradually decreasing scale. Such temporary protection is 
of the same nature as a patent, and should be governed by 
similar conditions. 

The remaining argument of Mr. Carey in support of the 
economic benefits of protectionism, applies only to countries 
whose exports consist of agricultural produce. He argues, 
that by a trade of this description they actually send away 
their soil; the distant consumers not giving back to the land 
of the country, as home consumers would do, the fertilizing 
elements which they abstract from it. This argument de- 
serves attention, on account of the physical truth on which it 
is founded; a truth which has only lately come to be under- 
stood, but which is henceforth. destined to be a permanent 
element in the thoughts of statesmen, as it must always have 
been in the destinies of nations. To the question of protection- 
ism, however, it is irrelevant. That the immense growth of 
raw produce in America to be consumed in Europe, is pro- 
gressively exhausting the soil of the Eastern, and even of 
the older Western States, and that both are already far less 
productive than formerly, is credible in itself, even if no one 
bore witness to it. But what I have already said respecting 
cost of carriage, is true also of the cost of manuring. ' Free 
trade does not compel America to export corn; she would 
cease to do so, if it ceased to be to her advantage. As, then, 
she would not persist in exporting raw produce and import- 
ing manufactures any longer than the labor she saved by 
doing so exceeded what the carriage cost her; so, when it 
becomes necessary for her to replace in the soil the elements 
of fertility which she had sent away, if the saving in cost of 
production were more than equivalent to the cost of cai'riage 
and of manure together, manure would be imported, and if 



PROTECTIONISM. 95 



not, the export of corn would cease. It is evident that one 
of these two things would already have taken place, if there 
Imd not been at hand a constant succession of new soils, not 
yet exhausted of their fertility, the cultivation of which ena- 
bles her, whether judiciously or not, to postpone the question 
of manure. As soon as it no longer answers better to break 
up new soils than to manure the old, America will either 
become a regular importer of manure, or will without pro- 
tecting duties grow corn for herself only, and manufacturing 
for herself, will make her manure, as Mr. Carey desires, at 
home. 

For these obvious reasons, I hold Mr. Carey's economic 
arguments for protectionism to be totally invalid. The econ- 
omic, however, is far from being the strongest point of his 
case. American protectionists often reason extremely ill, but 
it is an injustice to them to suppose that their protectionist 
creed rests upon nothing superior to an economic blunder: 
many of them have been led to it much more by confeidera- 
tion for the higher interests of humanity, than by purely 
economic reasons. They, and Mr. Carey at their head, deem 
it a necessary condition of human improvement that towns 
should abound; that men should combine their labor, by 
means of interchange, with near neighbors — with people of 
pursuits, capacities, and mental cultivation different from 
their own, sufficiently close at hand for mutual sharpening of 
wits and enlarging of ideas — rather than with people on the 
opposite side of the globe. They believe that a nation all 
engaged in the same, or nearly the same, pursuit — a nation 
all agricultural — cannot attain a high state of civilization and 
culture. And for this there is a great foundation of reason. 
If the difficulty can be overcome, the United States, with 
their free institutions, their universal schooling, and their 
omnipresent press, are the people to do it; but whether this 
is possible or not, is still a problem. So far, however, as it 
is an object to check the excessive dispersion of the popula- 



96 PROTECTIONISM. 



tion, Mr. Wakefield has pointed out a better way: to modify 
the existing method of disposing of the unoccupied lands, by 
raising their price, instead of lowering it, or giving away the 
land gratuitously, as is largely done since the passing of the 
Homestead Act. To cut the knot in Mr. Carey's fashion, by 
protectionism, it would be necessary that Ohio and Michigan 
should be protected against Massachusetts as well as against 
England; for the manufactories of New England, no more 
than those of the old country, accomplish his desideratum of 
bringing a manufacturing population to the doors of the 
Western farmer. Boston and New York do not supply the 
want of local towns to the Western prairies, any better than 
Manchester; and it is as difficult to get back the manure 
from the one place as from the other. 

There is only one part of the protectionist scheme which 
requires any further notice: its policy towards colonies, and 
foreign dependencies; that of compelling them to trade exclu- 
sively with the dominant country. A . country which thus 
secures to itself an extra foreign demand for its commodities, 
undoubtedly gives itself some advantage in the distribution 
of the general gains of the commercial world. Since, however, 
it causes the industry and capital of the colony to be diverted 
from channels which are proved to be the most productive, 
inasmuch as they are those into which industry and capital 
spontaneously tend to flow; there is a loss, on the whole, to 
the productive powers of the world, and the mother country 
does not gain so much as she makes the colony lose. If, 
therefore, the mother country refuses to acknowledge any 
reciprocity of obligation, she imposes a tribute on the colony 
in an indirect mode, greatly more oppressive and injurious 
than the direct. But if, with a more equitable spirit, she 
submits herself to corresponding restrictions for the benefit 
of the colony, the result of the whole transaction is the ridic- 
ulous one, that each party loses much, in order that the other 
may gain a little. 



PROTECTIONISM. 97 



MONOPOLIES COMBINATION LAWS. 

Governments, however, are oftener chargeable with having 
attempted, too successfully, to make things dear, than with 
having aimed by wrong means at making them cheap. The 
usual instrument for producing artificial dcarness is monop- 
oly. To confer a monopoly upon a producer or dealer, or 
upon a set of producers or dealers not too numerous to 
combine, is to give them the power of levying any amount 
of taxation on the public, for their individual benefit, which 
wdll not make the pubhc forego the use of the commodity. 
When the shares in the monopoly are so numerous and so 
widely scattered that they are prevented from combining, 
the evil is considerably less: but even then the competition 
is not so active among a limited, "as among an unlimited 
number. Those who feel assured of a fair average propor- 
tion in the general business, are seldom eager to get a larger 
share, by foregoing a portion of their profits. A limitation 
of competition, however partial, may have mischievous 
effects quite " disproportioned to the apparent cause. The 
mere exclusion of foreigners, from a branch of industry open 
to the free competition of every native, has been known, 
even in England, to render that branch a conspicuous excep- 
tion to the general industrial energy of the country. The 
silk manufacture of England remained far behind that of 
other countries of Europe, so long as the foreign fabrics 
were prohibited. In addition to the tax levied for the profit, 
real or imaginary, of the monopolists, the consumer thus 
pays an additional tax for their laziness and incapacity. 
"When relieved from the immediate stimulus of competition, 
producers and dealers grow indifferent to the dictates of 
their ultimate pecuniary interest; preferring to the most 
hopeful prospects, the present ease of adhering to routine. 
A person who is already thriving, seldom puts himself out 
of his way to commence even a lucrative improvement, 



98 PROTECTIONISM. 



unless urged by the additional motive of fear lest some rival 
should supplant him by getting possession of it before him. 
The condemnation of monopolies ought not to extend to 
patents, by which the originator of an improved process is 
allowed to enjoy, for a limited period, the exclusive privilege 
of using his own improvement. This is not making the 
commodity dear for his benefit, but merely postponing a part 
of the increased cheapness which 'the public owe to the 
inventor, in order to compensate and reward him for the 
service. That he ought to be both compensated and rewarded 
for it, will not be denied, and also that if all were at once 
allowed to avail themselves of his ingenuity, without having 
shared the labors or the expenses which he had to incur in 
bringing his idea into a practical shape, either such expenses 
and labors would be undergone by nobody, except very 
opulent and very public-spirited persons, or the state must 
put a value on the service rendered by an inventor, and 
make him a pecuniary grant. This has been done in some 
instances, and may be done without inconvenience in cases 
of very conspicuous public benefit; but in general an exclu- 
sive privilege, of temporary duration, is preferable; because 
it leaves nothing to any one's discretion; because the reward 
conferred by it depends upon the invention's being found 
useful, and the greater the usefulness the greater the reward ; 
and because it is paid by the very persons to whom the 
service is rendered, the consumers of the commodity. So 
decisive, indeed, are those considerations, that if the system 
of patents were abandoned for that of rewards by the state, 
the best shape which these could assume would be that of a 
small temporary tax, imposed for the inventor's benefit, on 
all persons making use of the invention. To this, however, 
or to any other system which would vest in the state the 
power of deciding whether an inventor should derive any 
pecuniary advantage from the public benefit which he 
confers, the objections are evidently stronger and more 



PROTECTIONISM. 99 



fundamental than the strongest whicli can possibly be urged 
against patents. It is generally admitted that the present 
patent laws need much improvement; but in this case, as 
well as in the closely analogous one of copyright, it would 
be a gross immorality in the law to set everybody free to 
use a person's work without his consent and without giving 
him an equivalent. I have seen with real alarm several 
recent attempts, in quarters carrying some authority, to 
impugn the principle of patents altogether; attempts which, 
if practically successful, would enthrone free stealing under 
the prostituted name of free trade, and make the men of 
brains, still more than at present, the needy retainers and 
dependents of the men of money-bags. 



CHAPTER VI. 

SPEECH OF HORACE GREELEY ON THE GROUNDS 
OF PROTECTION.* 



Mr. President and Respected Auditors: — It lias devolved on 
me, as junior advocate for the cause of protection, to open 
the discussion of this question. I do this with less diffidence 
than I should feel in meeting able opponents and practiced 
disputants on almost any other topic, because I am strongly 
confident that you, my hearers, will regard this as a subject 
demanding logic rather than rhetoric; the exhibition and 
proper treatment of homely truths, rather than the indulgence 
of flights of fancy. As sensible as you can be of my 
deficiencies as a debater, I have chosen to put my views on 
paper, in order that I may present them in as concise a 
manner as possible, and not consume my hour before com- 
mencing my argument. You have nothing of- oratory to 
lose by this course; I will hope that something may be 
gained to my cause in clearness and force. And here let me 
say that, while the hours I have been enabled to give to 
preparation for this debate have been few indeed, I feel the 
less regret in that my life has been in some measure a 
preparation. If there be any subject to which I have 
devoted time, and thought, and patient study, in a spirit of 

* Speech at the Tabernacle, New York, February 10, 1843, in public debate on 
this resolution : — 
Besolved, That a Protective Tariff is conducive to our National Prosperity. 
Affirmative: JosEru Blunt, Negative: Sajiuel J. Tilden, 

Horace Gkeei.et. Pauke Godvon. 

From Greeley's " Recollections of a Busy Life." 

(100) 



HORACE GREELEY ON TROTECTION. 101 

anxious desire to learn and follow the truth, it is this very 
question of protection; if 1 have totally misapprehended its 
character and bearings, then am I ignorant, hopelessly 
ignorant indeed. And, while I may not hope to set before 
you, in the brief space allotted me, all that is essential to a 
full understanding of a question which spans the whole arch 
of political economy, — on which able men have written 
volumes without at all exhausting it, — I do entertain a 
sanguine hope that I shall be able to set before you considera- 
tions conclusive to the candid and unbiased mind of the 
policy and necessity of protection. Let us not waste our 
time on non-essentials. That unwise and unjust measures 
have been adopted under the pretence of protection, I stand 
not here to deny; that laws intended to be protective have 
sometimes been injurious in their tendency, I need not 
dispute. The logic which would thence infer the futility or 
the danger of protective legislation would just as easily prove 
all laws and all policy mischievous and destructive. Politi- 
cal Economy is one of the latest born of the sciences; the 
very fact that we meet here this evening to discuss a question 
so fundamental as this, proves it to be yet in its comparative 
infancy. The sole favor I shall ask of my opponents, there- 
fore, is that they will not waste their efforts and your time 
in attacking positions that we do not maintain, and hewing 
down straw giants of their own manufacture, but meet 
directly the arguments which I shall advance, and which, for 
the sake of simplicity and clearness, I will proceed to put 
before you in the form of propositions and their illustrations, 
as follows: — 

Proposition I. A Nation which would he prosperous, must 
prosecute various branches of industry, and supply its vital wants 
mainly by the labor of its own hands. 

Cast your eyes where you will over the face of the eartfi, 
trace back the history of man and of nations to the earliest 
recorded periods, and I think you will find this rule uniformly 



102 HORACE GREELEY ON PROTECTION. 

prevailing, that the nation which is eminently agricultural 
and grain-exporting, — which depends mainly or principally 
on other nations for its regular supplies of manufactured 
fabrics, — ^has been comparatively a poor nation, and ulti- 
mately a dependent nation. I do not say that this is the 
instant result of exchanging the rude staples of agriculture 
for the more delicate fabrics of art; but I maintain that it 
is the inevitable tendency. The agricultural nation falls in 
debt, becomes impoverished, and ultimately subject. The 
palaces of ^'merchant princes" may emblazon its harbors 
and overshadow its navigable waters; there maybe a mighty 
Alexandria, but a miserable Egjrpt behind it; a flourishing 
Odessa or Dantzic, but a rude, thinly-peopled southern Russia 
or Poland ; the exchangers may flourish and roll in luxury, 
but the producers famish and die. Indeed, few old and 
civilized countries become largely exporters of grain until 
they have lost, or by corruption are prepared to surrender, 
their independence; and these often present the spectacle of 
the laborer starving on the fields he has tilled, in the midst 
of their fertility and promise. These appearances rest upon 
and indicate a law, which I shall endeavor hereafter to 
explain. I pass now to my 

Peoposition II. There is a natural tendency in a compara- 
tively new country to become and continue an exporter of grain 
and other rude staples and an importer of manufactures. 

I think I hardly need waste time in demonstrating this 
proposition, since it is illustrated and confirmed by universal 
experience, and rests on obvious laws. The new country 
has abundant and fertile soil, and produces grain with 
remarkable facility; also, meats, timber, ashes, and most rude 
and bulky articles. Labor is there in demand, being 
required to clear, to build, to open roads, etc., and the 
laborers are comparatively few; while, in older countries, 
labor is abundant and cheap, as also are capital, machinery, 



HORACE GREELEY ON PROTECTION. 103 

and all the means of the cheap production of manufactured 
fabrics. I surely need not waste words to show that, in the 
absence of any counteracting policy, the new country will 
import, and continue to import, largely of the fabrics of 
older countries, and to pay for them, so far as she may, with 
her agricultural staples. I will endeavor to show hereafter 
that she will continue to do this long after she has attained 
a condition to manufacture them as cheaply for herself, even 
regarding the money cost alone. But that does not come 
under the present head. The whole history of our country, 
and especially from 1782 to '90, when we had no tariff and 
scarcely any paper money, — proves that, whatever may be 
the currency or the internal condition of the new country, 
it will continue to draw its chief supplies from the old, — 
large or small according to its measure of ability to pay or 
obtain credit for them ; but still, putting duties on imports 
out of the question, it will continue to buy its manufactures 
abroad, whether in prosperity or adversity, inflation or 
depression. I now advance to my 

Proposition III. It is injurious to the new country thus to 
continue dependent for its supplies of clothing and manufactured 
fairies on the old. 

As this is probably the point on which the doctrines of 
protection first come directly in collision with those of free 
trade, I will treat it more deliberately, and endeavor to 
illustrate and demonstrate it. 

I presume I need not waste time in showing that the 
ruling price of grain (as any manufacture) in a region whence 
it is considerably exported, will be its price at the point to 
which it is exported^ less the cost of such transportation. For 
instance: the cost of transporting wheat hither from large 
grain-growing sections of Illinois, was last fall sixty cents; 
and, New York being their most available market, and the 
price here ninety cents, the market there at once settled at 



104 HORACE GREELEY ON PROTECTION. 

tMrty cents. As this adjustment of prices rests on a law 
obvious, immutable as gravitation, I presume I need not 
waste words in establishing it. 

I proceed, then, to my next point. The average price of 
wheat throughout the world is something less than one 
dollar per bushel; higher where the consumption largely 
exceeds the adjacent production, lower where the production 
largely exceeds the immediate consumption (I put out of 
view in this statement the inequalities created by tarijffs, as I 
choose at this point to argue the question on the basis of 
universal free trade, which is of course the basis most 
favorable to my opponents). I say, then, if all tariffs were 
abolished to-morrow, the price of wheat in England — that 
being the most considerable ultimate market of surpluses, 
and the chief supplier of our manufactures^would govern 
the price in this country, while it would be itself governed 
by the price at which that staple could be procured in suffi- 
ciency from other grain-growing regions. Now, southern 
Eussia and central Poland produce wheat for exportation at 
thirty to fifty cents per bushel; but the price is so increased 
by the cost of transportation that at Dantzic it averages 
some ninety and at Odessa some eighty cents per bushel. 
The cost of importation to England from these ports being 
ten and fifteen cents respectively, the actual cost of the 
article in England, all charges paid, and allowing for a small 
increase of price consequent on the increased demand, would 
Bot in the absence of all tariffs whatever, exceed one dollar 
and ten cents per bushel; and this would be the average 
price at which we must sell it in England in order to buy 
thence the great bulk of our manufactures. I think no man 
will dispute or seriously vary this calculation. Neither can 
any reflecting man seriously contend that we could purchase 
forty or fifty millions' worth or more of foreign manufac- 
tures per annum, and pay for them in additional products of 
our slave labor — in cotton and tobacco. The consumption 



HORACE GREELEY ON PROTECTIOX. 105 

of these articles is now pressed to its utmost limit, — that of 
cotton especially is borne down by the immense weight of 
the crops annually thrown upon it, and almost constantly on 
the verge of a glut. If we are to buy our manufactures 
principally from Europe, we must pay for the additional 
amount mainly in the products of northern agricultural 
industry, — that is universally agreed on. The point to be 
determined is, whether we could obtain them abroad cheaper 
— really and positively cheaper, all tariffs being abrogated — 
than under an efficient system of protection. 

Let us closely scan this question. Illinois and Indiana, 
natural grain-growing States, need cloths; and, in the 
absence of all tariffs, these can be transported to them from 
England for two to three per cent, of their value. It fol- 
lows, then, that, in order to undersell any American compe- 
tition, the British manufacturer need only put his cloths at 
his factory 7?z;e per cent, below the wholesale price of such 
cloths in Illinois, in order to command the American market. 
That is, allowing a fair broadcloth to be manufactured in or 
near Illinois for three dollars and a quarter per yard, cash 
price, in the face of British rivalry, and paying American 
prices for materials and labor, the British manufacturer has 
only to make that same cloth at three dollars per yard in 
Leeds or Huddersfield, and he can decidedly undersell his 
American rival, and drive him out of the market. Mind, I 
do not say that he would supply the Illinois market at that 
price after the American rivalry had been crushed; I know he 
would not ; but, so long as any serious effort to build up or 
sustain manufactures in this country existed, the large and 
strong European establishments would struggle for the 
additional market which our growing and plenteous country 
so invitingly proffers. It is well known that in 1815-16, 
after the close of the last war, British manufactures were 
offered for sale in our chief markets at the rate of ^^ pound 
for pound^'''' — that is, fabrics of which the first cost to the 



106 HOEACE GREELEY ON PROTECTION. 

maniifacturer was $4.44 were offered in Boston market at 
$3.33, duty-paid. This was not sacrifice — it was dictated 
by a profound forecast. Well did tlie foreign fabricants 
know that their self-interest dictated the utter overthrow, at 
whatever cost, of the young rivals which the war had built up 
in this country, and which our government and a majority of 
the people had blindly or indolently abandoned to their fate. 
"William Cobbett, the celebrated radical, but with a sturdy 
English heart, boasted upon his first return to England that 
he had been actively engaged here in promoting the interests 
of his country by compassing the destruction of American 
manufactories in various ways which he specified — "some- 
times (says he) ly fire^ We all know that great sacrifices 
are often submitted to by a rich and long-established stage 
owner, steamboat proprietor, or whatever, to break down a 
young and comparatively penniless rival. So in a thousand 
instances, especially in a rivalry for so large a prize as the 
supplying with manufactures of a great and growing nation. 
But I here put aside all calculations of a temporary sacrifice ; 
I suppose merely that the foreign manufacturers will supply 
our grain-growing States with cloths at a trifling profit so 
long as they encounter American rivalry; and I say it is 
perfectly obvious that, if it cost three dollars and a quarter 
a yard to make a fair broadcloth in or near Illinois, in the 
infancy of our arts, and a like article could be made in 
Europe for three dollars, then the utter destruction of the 
American manufacture is inevitable. The foreign drives it 
out of the market and its maker into bankruptcy; and now 
our farmers, in purchasing their cloths, '' buy where they 
can buy cheapest," which is the first commandment of free 
trade, and get their cloth of England at three dollars a yard. 
I maintain that this would not last a year after the Ameri- 
can factories had been silenced — that then the British oper- 
ator would begin to think of profits as well as bare cost for 
his cloth, and to adjust his prices so as to recover what it 



HORACE GREELEY OxN PROTECTION. 107 

had cost liim to put down the dangerous competition. But 
let this pass for the present, and say the foreign cloth is 
sold to Illinois for three dollars per yard. We have yet 
to ascertain how much she has gained or lost by the 
operation. 

This, says free trade, is very plain and easy. The four 
simple rules of arithmetic suffice to measure it. She has 
bought, say a million yards of foreign cloth for three dol- 
lars, where she formerly paid three and a quarter for Amer- 
ic9,n; making a clear saving of a quarter of a million 
dollars. 

But not so fast — we have omitted one important element 
of the calculation. We have yet to see what effect the pur- 
chase of her cloth in Europe, as contrasted with its man- 
ufacture at home, will have on the price of her agri- 
cultural staples. We have seen already that, in case she 
is forced to sell a portion of her surplus product in Europe, 
the price of that surplus must be the price which can be 
procured for it in England, less the cost of carrying it there. 
In other words: the average price in England being one 
dollar and ten cents, and the average cost of bringing it to 
New York being at least fifty cents, and then of transport- 
ing it to England at least twenty-five more, the net pro- 
ceeds to Ilhnois cannot exceed thirty-five cents per bushel. 
I need not more than state so obvious a truth as that the 
price at which the surplus can be sold governs the price of 
the whole crop ; nor, indeed, if it were possible to deny this, 
would it at all affect the argument. The real question to be 
determined is, not whether the American or the British 
manufacturers will furnish the most cloth for the least cash^ 
but -which will supply the requisite quantity of cloth for the 
least grain in Illinois. Now we have seen already that the 
price of grain at any point where it is readily and largely 
produced, is governed by its nearness to or remoteness from 
the market to which its surplus tends, and the least favorable 



108 HORACE GREELEY ON PROTECTION. 

market in wMcli any portion of it must be sold. For 
instance: If Illinois produces a surplus of five million 
bushels of grain, and can sell one million of bushels in 
New York, and two millions in New England, and another 
million in the West Indies, and for the fifth million is com- 
pelled to seek a market in England, and that, being the 
remotest point at which she sells, and the point most exposed 
to disadvantageous competition, is naturally the poorest 
market, that farthest and lowest market to which she sends 
her surplus will govern, to a great extent if not absolutely, 
the price she receives for the whole surplus. But, on the 
other hand, let her cloths, her wares, be manufactured in 
her midst or on the junctions and waterfall's in her vicinity, 
thus affording an immediate market for her grain, and now 
the average price of it rises, by an irresistible law, nearly or 
quite to the average of the world. Assuming that average 
to be one dollar, the price in Illinois, making allowance for 
the fertility and cheapness of her soil, could not fall below 
an average of seventy-five cents. Indeed the experience of 
the periods when her consumption of grain has been equal 
to her production, as well as that of other sections where 
the same has been the case, proves conclusively that the 
average price of her wheat would exceed that sum. 

We are now ready to calculate the profit and loss. ^ Illi- 
nois, under free trade, with her "work-shops in Europe," 
will buy her cloth twenty-five cents per yard cheaper, and 
thus make a nominal saving of two hundred and fifty thou- 
sand dollars in her year's supply; but, she thereby compels 
herself to pay for it in wheat at thirty-five instead of 
seventy-five cents per bushel, or to give over 7une and one- 
third bushels of wheat for every yard under free trade, 
instead of four and a third under a system of home pro- 
duction. In other wor(?fe, while she is making a quarter of 
a million of dollars by buying her cloth " where she can 
buy cheapest," she is losing nearly two milhons of dollars on 



HORACE GREELEY ON PROTECTION. 1^9 

the net product of her grain. The striking of a balance 
between her profit and her loss is certainly not a difficult, 
but rather an unpromising, operation. 

Or, let us state the result in another form: She can buy 
her cloth a little cheaper in England, — labor being there 
lower, machinery more perfect, and capital more abundant; 
but, in order to pay for it, she must not merely sell her own 
products at a correspondingly low price, but enough lower 
to overcome the cost of transporting them from Illinois to 
England. She will give the cloth-maker in England less 
grain for her cloth than she would give to the man who 
made it on her own soil; but for every bushel she sends him 
in payment for his fabric, she must give two to the wagoner, 
boatman, shipper, and factor who transport it thither. On 
the whole product of her industry, two-thirds is tolled out 
by carriers and bored out by inspectors, until but a beg- 
garly remnant is left to satisfy the fabricator of her goods. 

And here I trust I have made obvious to you the law 
which dooms an agricultural country to inevitable and 
ruinous disadvantage in exchanging its staples for manu- 
factures, and involves in it perpetual and increasing debt 
and dependence. The fact^ I early alluded to; is not the 
reason now apparent? It is not that agricultural commu- 
nities are more extravagant or less industrious than those 
in which manufactures or commerce preponderate, — it is 
because there is an inevitable disadvantage to agriculture in 
the very nature of all distant exchanges. Its products are 
far more perishable than any other; they cannot so well 
await a future demand; but in their excessive bulk and 
density is the great evil. We have seen that, while the 
Enghsh manufacturer can send his fabrics to Illinois for less 
than five per cent, on their first cost, the Illinois farmer 
must pay two hundred per cent, on his grain for its trans- 
portation to English consumers. In other words: the Eng- 
lish manufacturer need only produce his goods five per 



110 HORACE GREELEY ON PROTECTION. 

cent, below the American to drive the latter out of the 
Illinois market, the Illinoisian must produce wheat for one- 
third of its English price in order to compete with the 
English and Polish grain-grower in Birmingham and Shef- 
field. 

And here is the answer to that scintillation of free trade 
wisdom which flashes out in wonder that manufactures are 
eternally and especially in want of protection, while agricul- 
ture and commerce need none. The assumption is false in 
any sense, — our commerce and navigation cannot live with- 
out protection, — never did live so, — but let that pass. It is 
the interest of the whole country which demands that that 
portion of its industry which is most exposed to ruinous 
foreign rivalry should be cherished and sustained. The 
wheat-grower, the grazier, is protected byx)cean and land; 
by the fact that no foreign article can be introduced to rival 
his except at a cost for transportation of some thirty to one 
hundred per cent, on its value; while our manufactures can 
be inundated by foreign competition at a cost of some two 
to ten per cent. It is the grain-grower, the cattle-raiser, who 
is protected by a duty on foreign manufactures, quite as 
much as the spinner or shoemaker. He who talks of manu- 
factures being protected and nothing else, might just as 
sensibly complain that we fortify Boston and New York and 
not Pittsburg and Cincinnati. 

I proceed now to set forth my 

Ppoposition IV. That equilibrium between Agriculture^ 
Manufactures^ and Commerce;^ lohich we needy can only he main- 
tained by means of Protective Duties. 

You will have seen that the object we seek is not to make 
our country a manufacturer for other nations, but for herself, 
— not to make her the baker and brewer and tailor of other 
people, but of her own household. If I understand at all 
the first rudiments of national economy, it is best for each 



HORACE GREELEY ON PROTECTION. Ill 

and all nations that each should mainly fabricate for itself, 
freely purchasing of others all such staples as its own soil 
or climate proves ungenial to. We appreciate quite as well 
as our opponents the impolicy of attempting to grow coffee- 
in Grreenland or glaciers in Malabar, — to extract blood from 
a turnip or sunbeams from cucumbers. A vast deal of wit 
has been expended on our stupidity by our acuter adversa- 
ries, but it has been quite thrown away, except as it has 
excited the hollow laughter of the ignorant as well as 
thoughtless. All this, however sharply pushed, falls wide 
of our true position. To all the fine words we hear about 
"the impossibility of counteracting the laws of nature," 
"trade regulating itself," etc, etc., we bow with due defer- 
ence, and wait for the sage to resume his argument. What 
we do affirm is- this, that it is best for every nation to make at 
home all those articles of its own consumption that can Just as 
well — that is, luith nearly or quite as little labor — be made there 
as anywhere else. We say it is not wise, it is not well, to 
send to France for boots, to Germany for hose, to England 
for knives and forks, and so on; because the real cost of 
them would be less, — even though the nominal price should 
be slightly more, — if we made them in our own country; 
while the facility of paying for them would be much greater. 
We do not object to the occasional importation of choice 
articles to operate as specimens and incentives to our own 
artisans to improve the quality and finish of their workman- 
ship, — where the home competition does not avail to bring 
the process to its perfection, as it often will. In such cases, 
the rich and luxurious will usually be the buyers of these 
choice articles, and can afford to pay a good duty. There 
are gentlemen of extra polish in our cities and villages who 
think no coat good enough for them which is not woven in 
an English loom, — no boot adequately transparent which 
has not been fashioned by a Parisian master. I quarrel not 
with their taste : I only say that, since the Governinent must 



112 HORACE GREELEY ON PROTECTION. 



have revenue and the American artisan should have protec- 
tion, I am glad it is so fixed that these gentlemen shall 
contribute handsomely to the former, and gratify their 
aspirations with the least possible detriment to tHb latter. 
It does not invalidate the fact nor the efficiency of protection 
that foreign competition with American workmanship is not 
entirely shut out. It i.5 the general result which is important, 
and not the exception. Now, he who can seriously contend, 
as some have seemed to do, that protective duties do not aid 
and extend the domestic production of the articles so pro- 
tected might as well undertake to argue the sun out of the 
heavens at mid-day. All experience, all common sense, 
condemn him. Do we not know that our manufactures first 
shot up under the stringent protection of the embargo and 
war ? that they withered and crumbled under the compara- 
tive free trade of the few succeeding years ? that they were 
revived and extended by the tariffs of 1824 and '28 ? Do 
we not know that Germany, crippled by British policy, 
which inundated her with goods yet excluded her grain and 
timber, was driven, years since, to the establishment of her 
'' Zoll-Yerein " or Tariff Union, — a measure of careful and 
stringent protection, under which manufactures have grown 
up and flourished through all her many States ? She has 
adhered steadily, firmly, to her protective policy, while we 
have faltered and oscillated ; and what is the result ? She 
has created and established her manufactures; and in doing 
so has vastly increased her wealth and augmented the reward 
of her industry. Her public sentiment, as expressed through 
its thousand channels, is almost unanimous in favor of the 
protective policy ; and now, when England, finding at length 
that her cupidity has overreached itself, — that she cannot 
supply the Germans with clothes refuse to buy their bread, 
talks of relaxing her corn laws in order to coax back her 
ancient and profitable customer, the answer is, '' No; it is 
now too late. We have built up home manufactures in 



HORACE GREELEY ON PROTECTION. • 113 

repelling your rapacity, — we cannot destroy them at your 
caprice. "What guarantee have we that, should we accede 
to your terms, you would not return again to your policy of 
taking all and giving none so soon as our factories had 
crumbled into ruin ? Besides, we have found that we can 
make cheaper — really cheaper — than we were able to buy, 
— can pay better wages to our laborers, and secure a better 
and steadier market for our products. We are content to 
abide in the position to which you have driven us. Pass on! " 

But this is not the sentiment of Germany alone. All 
Europe acts on the principle of self -protection; because all 
Europe sees its benefits. The British journals complain 
that, though they have made a show of relaxation in their 
own tariff, and their Premier has made a free trade speech 
in Parliament, the chaff has caught no birds; hut six hostile 
tariffs — all protective in their character, and all aimed at the 
supremacy of British manufactures— were enacted within 
the year 1842. And thus, while schoolmen plausibly talk 
of the adoption and spread of free-trade principles, and 
their rapid advances to speedy ascendency, the practical man 
knows that the truth is otherwise, and that many years must 
elapse before the great Colossus of manufacturing monopoly 
will find another Portugal to drain off her life-blood under 
the delusive pretense of a commercial reciprocity. And, 
w^hile Britain continues to pour forth her specious treatises 
on political economy, proving protection a mistake and an 
impossibility through her Parliamentary reports and speeches 
in praise of free trade, the shrewd statesmen of other nations 
humor the joke with all possible gravity, and pass it on to 
the next neighbor; yet all the time take care of their own 
interests, just as though Adam Smith l^ad never speculated, 
nor Peel soberly expatiated on the blessings of free trade, 
looking round occasionally with a curious interest to see 
whether anybody was really taken in by it. 

I have partly anticipated, yet I will state distinctly, my 



114 HORACE GREELEY ON PROTECTION. 

Proposition V. Protection is necessary and proper to sus- 
tain as well as to create a beneficent adjustment of our national 
industry. 

a Why can't our manufacturers go alone ? " petulantly 
asks a free-trader; "they have had protection long enough. 
They ought not to need it any more." To this I answer 
that, if manufactures were protected as a matter of special 
bounty or favor to the manufacturers, a single day were too 
long. I would not consent that they should be sustained 
one day longer than the interests of the whole country 
required. I think you have already seen that, not for the 
sake of manufacturers, but for the sake of all productive 
labor, should, protection be afforded. If I have been intel- 
ligible, you will have seen that the purpose and essence of 
protection is labor-saving, — the making two bladee of grass 
grow instead of one. This it does by " planting the manu- 
facturer as nearly as may be by the side of the farmer," as 
Mr. Jefferson expressed it, and thereby securing to the latter 
a market for which he had looked to Europe in vain. Now, 
the market of the latter is certain as the recurrence of 
appetite; but that is not all. 

But why is a tariff necessary after manufactures are once 
established? "You say," says a free-trader, "that you can 
manufacture cheaper if protected than we can buy abroad; 
then why not do it without protection, and save all trouble? " 
Let me answer this cavil:— 

I will suppose that the manufactures of this country 
amount in value to one hundred millions of dollars per 
annum, and those of Great Britain to three hundred millions. 
Let us suppose also that, under an efficient protective tariff, 
ours are produced five per cent, cheaper than those of Eng- 
land, and that our own markets are supplied entirely from 
the home product. But at the end of this year, 1843, we, — 
concluding that our manufactures have been protected long 
enough and ought now to go alone, — repeal absolutely our 



HORACE GREELEY ON PROTECTION. 115 

tariff, and commit our great interests thoroughly to the 
guidance of "free trade." Well; at this very time the 
British manufacturers, on making up the account and review 
of their year's business, find that they have manufactured 
goods costing them three hundred millions, as aforesaid, aiid 
have sold to just about that amount, leaving a residue or 
surplus on hand of fifteen or twenty millions' worth. These 
are to be sold; and their net proceeds will constitute the 
interest on their capital and the prbfit on their year's busi- 
ness. But loliere shall they be sold? If crowded on the 
home or their established foreign markets, they will glut 
and depress those markets, causing a general decline of 
prices and a heavy loss, not merely on this quantity of 
goods, but on the whole of their next year's business. They 
know better than to do any such thing. Instead of it, they 
say, " Here is the American market just thrown open to us 
by a repeal of their tariff; let us send thither our surplus, 
and sell it for what it will fetch." They ship it over accord- 
ingly, and in two or three weeks it is rattling off through 
our auction stores, at prices first five, then ten, fifteen, twenty, 
and down to thirty per cent, below our previous rates. 
Every jobber and dealer is tickled with the idea of buying 
goods of novel patterns so wonderfully cheap; and the sale 
proceeds briskly, though, at constantly declining prices, till 
the whole stock is disposed of and our market is gorged to 
repletion. 

Now, the British manufacturers may not have received 
for the whole twenty millions' worth of goods over fourteen 
or fifteen millions, but what of it? Whatever it may be is 
clear profit on their year's bjisiness in cash or its full equiv- 
alent. All their established markets are kept clear and 
eager; and they can now go on vigorously and profitably 
with the business of the new year. But more; they have 
crippled an active and growing rival; they have opened a 
new market, which shaU ere long be theirs also. 



116 HORACE GREELEY ON PROTECTION. 

Let us now look at our side of tlie question: — 
The American manufacturers have also a stock of goods 
on hand, and they come into our market to dispose of them. 
But they suddenly find that market forestalled and depressed 
by rival fabrics of attractive novelty, and selling in profu- 
sion at prices which rapidly run down to twenty-fiye per 
cent, below cost. What are they to do? They cannot force 
sales at any price not utterly ruinous; there is no demand at 
any rate. They cannot retaliate upon England the mischief 
they must suffer, — her tariff forbids; and the other markets 
of the world are fully supplied, and will bear but a limited 
pressure. The foreign influx has created a scarcity of 
money as well as a plethora of goods. Specie has largely 
been exported in payment, which has compelled the banks 
to contract and deny loans. Still, their obligations must be 
met; if they cannot make sales, the sheriff will, and must. 
It is not merely their surplus, but their whole product, 
which has been depreciated and made unavailable at a blow. 
The end is easily foreseen; our manufacturers become bank- 
rupt and are broken up; their works are brought to a dead 
stand; the laborers therein, after spending months in con- 
strained idleness, are driven by famine into the Western 
wilderness, or into less productive and less congenial voca- 
tions; their acquired skill and dexterity, as well as a portion 
of their time, are a dead loss to themselves and the com- 
munity; and we commence the slow and toilsome process of 
rebuilding and rearranging our industry on the one-sided or 
agricultural basis. Such is the process which we have un- 
dergone twice already. How many repetitions shall satisfy 
us? 

Now, will any man gravely argue that we have made five 
or six millions by this cheap purchase of British goods, — by 
" buying where we could buy cheapest?" Will he not see 
that, though the jirice was low, the cost is very great? But 
the apparent saving is doubly deceptive; for the British 



HORACE GREELEY OX PROTECTION. 117 

manufacturers, ha;\nng utterly crushed their American rivals 
by one or two operations of this kind, soon find here a mar- 
ket, not for a beggarly surplus of fifteen or twenty millions, 
but they have now a demand for the amount of our whole 
consumpt^ion, which, making allowance for our diminished 
abihty to pay, would probably still reach fifty millions per 
annum. This increased demand would soon produce activ- 
ity and buoyancy in the general market; and now the for- 
eign manufacturers would say in their consultations, " We 
have sold some millions' worth of goods to America for less 
than cost, in order to obtain control of that market; now we 
have it, and must retrieve our losses," — and they would re- 
trieve them, with interest. They would have a perfect right 
to do so. I hope no man has understood me as implying 
any infringement of the dictates of honesty on their part, 
still less of the laws of trade. They have a perfect right to 
sell goods in our markets on such terms as we prescribe and 
they can afford; it is lue, who set up our own vital interests 
to be bowled down by their rivalry, who are alone to be 
blamed. 

"Who does not see that this sending out our great industrial 
interests unarmed and unshielded to battle against the mail- 
clad legions opposed to them in the arena of trade is to insure 
their destruction? It were just as wise to say that, because our 
people are brave, therefore they shall repel any invader 
without fire-arms, as to say that the restrictions of other 
nations ought not to be opposed by us because our artisans 
are skilKul and our manufactures have made great advances. 
The very fact that our manufactures are greatly extended 
and improved is the strong reason why they should not be 
exposed to destruction. If they were of no amount or 
value, their loss w^ould be less disastrous; but now the five 
or six millions we should make on the cheaper importation 
of goods would cost us one hundred millions in the destruc- 
tion of manufacturing property alone. 



118 HORACE GREELEY ON PROTECTION. 

Yet this is but an item of our damage. The manufactur- 
ing classes feel the first effect of the blow, but it would par- 
alyze every muscle of society. One hundred thousand arti- 
sans and laborers, discharged from our ruined factories, 
after being some time out of employment, at a waste of mil- 
lions of the national wealth, are at last driven by famine to 
engage in other avocations, — of course with inferior skill and 
at an inferior price. The farmer, gardener, grocer, lose them 
as customers to meet them as rivals. They crowd the labor- 
markets of those branches of industry which we are still 
permitted to pursue, just at the time when the demand for 
their products has fallen off, and the price is rapidly dechn- 
ing. The result is just what we have seen in a former 
instance: all that any man may make by buying foreign goods 
cheap, he loses ten times over by the decline of his own prop- 
erty, product, or labor, while to nine- tenths of the whole 
people the result is unmixed calamity. The disastrous con- 
sequences to a nation of the mere derangement and paralysis 
of its industry which must follow the breaking down of any 
of its great producing interests have never yet been suffi- 
ciently estimated. Free trade, indeed, assures us that every 
person thrown out of employment in one place or capacity 
has only to choose another; but almost every workingman 
knows from experience that such is not the fact, — that the 
loss of situation through the failure of his business is often a 
sore calamity. I know a worthy citizen who spent six years 
in learning the trade of a hatter, which he had just perfected 
in 1798, when an immense importation of foreign hats utterly 
paralyzed the manufacture in this country. He traveled and 
sought for months, but could find no employment at any 
price, and at last gave up the pursuit, found work in some 
other capacity, and has never made a hat since. He lives 
yet, and now comfortably, for he is industrious and frugal; 
but the six years he gave to learn his trade were utterly lost 
to him, — lost for the want of adequate and steady protection 



HORACE GREELEY ON PROTECTION. 119 

to home industry. I insist that the government has failed 
of disc}iarging its proper and rightful duty to that citizen 
and to thousands and tens of thousands who have suffered 
from like causes. I insist that, if the government had per- 
mitted without complaint a foreign force to land on our 
shores and plunder that man's house of the savings of six 
years of faithful industry, the neglect of duty would not have 
been more flagrant. And I firmly believe that the people of 
this country are one thousand millions of dollars poorer at 
this moment than they would have been had their entire pro- 
ductive industry been constantly protected, on the principles 
I have laid down, from the formation of the government till 
now. The steadiness of employment and of recompense thus 
secured, the comparative absence of constrained idleness, and 
the more efficient application of the labor actually performed, 
would have vastly increased the product, — would have 
improved and beautified the whole face of the country; and 
the moral and intellectual advantages thence accruing would 
alone have been inestimable. A season of suspension of 
labor in a community is usually one of aggravated dissipation, 
drunkenness, and crime. 

But let me more clearly illustrate the effect of foreign 
competition in raising prices to the consumer. To do this I 
will take my own calling for an example, because I under- 
stand that best; though any of you can apply the principle 
to that with which he may be better acquainted. I am a 
publisher of newspapers, and suppose I afford them at a 
cheap rate. But the ability to maintain that cheapness is 
based on the fact that I can certainly sell a large edition 
daily; so that no part of that edition shall remain a dead loss 
on my hands. Now, if there were an active and formidable 
foreign competition in newspapers — if the edition which I 
printed during the night were frequently rendered unsalable 
by the arrival of a foreign ship freighted with newspapers 
early in the morning, — the present rates could not be con- 



120 HORACE GREELEY ON PROTECTION. 

tinued: the price must be increased or the quality would 
decline. I presume this holds equally good of the production 
of calicoes, glass, and penknives, as of newspapers, though it 
may be somewhat modified by the nature of the article to 
vvhich it is applied. That it does hold true of sheetings, nails, 
and thousands of articles, is abundantly notorious. 

I have not burdened you with statistics, — you know they 
are the rehance, the stronghold, of the cause of protection, 
and that we can produce them by acres. My aim has been 
to exhibit not mere collections of facts, however pertinent 
and forcible, but the laius on which those facts are based, — 
not the immediate manifestation, but the ever-living neces- 
sity from which it springs. The contemplation of these laws 
assures me that those articles which are supplied to us by 
home production alone are relatively cheaper than those which 
are rivaled and competed with from abroad. And I am 
equally confident that the shutting out of foreign competition 
from our markets for other articles of general necessity and 
liberal consumption which can be made here with as little 
labor as anywhere, would be followed by a corresponding 
result, — a reduction of the price to the consumer at the same 
time with increased employment and reward to our produc- 
ing classes. 

But, Mr. President, were this only on one sid3 true, — were 
it certain that the price of the home product would be perma- 
nently higher than that of the foreign, I should still insist on 
efficient protection, and for reasons I have sufficiently shown. 
Grant that a British cloth costs $3 per yard, and a corres- 
ponding American fabric $4, 1 still hold that the latter 
would be decidedly the cheaper for us. The fuel, timber, 
fruits, vegetables, etc., which make up so large a share of the 
cost of the home product, would be rendered comparatively 
valueless by having our work-shops in Europe. I look not 
so much to the nominal price as to the comparative facility 
of payment. And, where cheapness is only to be attained by 



HORACE GREELEY ON PROTECTION. 121 

a depression of the wages of labor to the neighborhood of 
the European standard, I prefer that it should be dispensed 
with. One thing must answer to another; and I hold that 
the farmers of this country can better afford, as a matter of 
pecuniary advantage, to pay a good price for manufactured 
articles than to obtain them lower fhrough the depression 
and inadequacy of the wages of the artisan and laborer. 

But even this is not the woi'st feature of the case. The 
labor which we have here thrown out of employment by the 
cheap importation of this article is now ready to be employed 
again at any price, — if not one that will afford bread and 
straw, then it must accept one that will produce potatoes and 
rubbish; and with the product some free-trader proceeds to 
break down the price and destroy the reward of similar labor 
in some other portion of the earth. And thus each depression 
of wages produces another, and that a third, and so on, 
making the circuit of the globe, — the aggravated necessities 
of the poor acting and reacting upon each other, increasing 
the omnipotence of capital and deepening the dependence of 
labor, swelling and pampering a bloated and factitious 
commerce, grinding down and grinding down the destitute, 
until Malthu's remedy for poverty shall become a grateful 
specific, and amid the splendors and luxuries of an all-devour- 
ing commercial feudalism, the squalid and famished mil- 
lions, its dependants and victims, shall welcome death as a 
deUverer from their sufferings and despair. 

I wish time permitted me to give a hasty glance over the 
doctrines and teachings of the free-trade sophists, who 
esteem themselves the political economists, christen their own 
views liberal and enlightened, and complacently put ours 
aside as benighted and barbarous. I should delight to show 
you how they mingle subtle fallacy with obvious truth, how 
they reason acutely from assumed premises, which, being 
mistaken or incomplete, lead to false and often absurd con- 
clusions, — how they contradict and confound each other, and 



122 HORACE GREELEY ON PROTECTION. 

often, from Adam Smith, their patriarch, down to McCul- 
loch and Ricardo, either make admissions which undermine 
their whole fabric, or confess themselves ignorant or in the 
dark on points the most vital to a correct understanding of 
the great subject they profess to have reduced to a science. 
Yet even Adam Smith himself expressly approves and justifies 
the British navigation act, the most aggressively protective 
measure ever enacted, — a measure which, not being under- 
stood and seasonably counteracted by other nations, changed 
for centuries the destinies of the world, — which silently sapped 
and overthrew the commercial and political greatness of Hol- 
land, — which silenced the thunder of Van Tromp, and swept 
the broom from his mast-head. But I must not detain you 
longer. 1 do not ask you to judge of this matter by author- 
ity, but from facts which come home to your reason and 
your daily experience. There is not an observing and 
strong-minded mechanic in our city who could not set any 
one of these doctors of the law right on essential points. I 
beg you to consider how few great practical statesmen they 
have ever been able to win to their standard, — I might 
almost say none ; for Huskisson was but a nominal disciple, 
and expressly contravened their whole system upon an 
attempt to apply it to the corn laws; and Calhoun is but a 
free trader by location, and has never yet answered his own 
powerful arguments in behalf of protection. On the other 
hand, we point you to the long array of mighty names which 
have illustrated the annals of statesmanship of modern times, 
— to Chatham, William Pitt, and the G-reat Frederick of 
Prussia; to the whole array of memorable French states- 
men, including Napoleon the first of them all; to our own 
Washington, Hamilton, Jefferson, and Madison; to our 
two Clintons, Tompkins, to say nothing of the eagle-eyed 
and genial-hearted living masterspirit [Henry Clay] of our 
time. The opinions and the arguments of all these are on 
record; it is by hearkening to and heeding their counsels that 



HORACE GREELEY ON PROTECTION. 123 

we shall be prepared to walk m tlie light of experience and 
look forward to a glorious national destiny. My friends! 1 
dare not detain you longer. I commit to you the cause of the 
Nation's independence, of her stability and her prosperity. 
Guard it wisely and shield it well; for it involves your own 
happiness and the enduring welfare of your countrymen I 



CHAPTER VII. 

PROTECTING DUTIES.* 

By Francis "Wayland, B.D., LL.D., 

President of Brown University. 



ON THE EFFECTS OF DIRECT LEGISLATION AS A MEANS OP 
INCREASING PRODUCTION. 

I HAVE thus far said nothing upon the effect of legisla- 
tive enactments, by means of bounties and protecting 
duties, as a means of increasing production. The reason is, 
that I have not yet been able to discover in what manner 
they produce this effect. Nevertheless, since many persons 
suppose them to be of great importance, it might seem that 
a discussion of this subject was incomplete, if they were 
passed over in silence. I shall devote this section to a con- 
sideration of their effects. 

1. Duties of this sort are to be considered apart from 
those levied for the support of government, because they 
are either not necessary for this purpose, or else they are 
levied for a different object. Thus, if five per cent, on an 
import be necessary to the support of government, and ten 
per cent, be levied, in order to favor, or, as it is said, to 
protect one branch of industry, the additional five per cent, 
is levied for a distinct object, aside from that of the support 
of government. It is only this latter part of the duty 
which we propose to consider; that is, so much of the duty 

* Elements of Political Economy, 1441. 

(124) 



PROTECTING DUTIES. 125 

as is levied for the purpose of favoring one particular 
product. 

2. Now, if such a duty have any effect upon the pro- 
ductiveness of a nation, it must be in one of these ways. It 
must either first increase the capital' of a country, or, 
secondly, increase its number of laborers; or, third, create 
a greater stimulus to labor. I think it evident, from what 
has already been shown, that every condition which affects 
production, must exert its influence in one of these three 
methods. 

3. I think it evident that legislation of this sort cannot 
increase the capital of a country. The capital of a country, 
at any moment, is its present amount of annual and fixed 
capital. Now, a law cannot create capital; since, if it could, 
there would be no necessity for any other labor than that of 
legislation; and, in order to grow rich, a nation would have 
nothing to do but meet in public assembly, and spend its 
whole time in making and hearing speeches, and enacting 
laws. I believe, however, that this mode of growing rich, 
has never been found remarkably successful. 

If it be said that, in this manner, we shall attract foreign 
capital to our own county, I answer, this depends not upon 
legislation, but upon the rate of interest, and the security of 
property. If these conditions be more favorable here than 
in another country, capital will flow hither. If they be 
more favorable in another country than here, it will flow 
thither. The system of Great Britain has been exclusive, 
but capital does not go from this country to be invested 
there. 

4. Legislation of this kind cannot increase the actual 
number of laborers. The number of laborers is as the 
number of inhabitants. Legislation has never been sup- 
posed to have any power to create men. It is true, popula- 
lation is found always to increase with the increase of means 
of living; that is, with the increase of the productiveness of 



126 PROTECTING DUTIES. 

labor. Population will increase or diminish, just in propor- 
tion as a laborer is able to procure greater or less wages for 
a day's labor; that is, as everything is cheaper or dearer. 
Whether the tendency of duties is to render productions 
cheap, remains to be considered. It must, however, be evi- 
dent to all, that laws do not create human beings ; of course, 
they add nothing to the number of laborers; that is, of 
human beings in a country. 

It may be said, we may thus induce laborers to come 
from other countries. To this it may be answered, this will 
depend upon the wages of labor. If laborers be better paid 
here than elsewhere, they will come here, and not otherwise. 
Besides, what is called protection changes only the mode of 
labor; that is, it takes men from one mode of labor, to 
employ them upon another. Suppose, then, that it attracts 
foreign laborers to one branch of industry, it deters those 
in another branch of industry from immigrating. If, for 
instance, manufacturers are protected, this will tend to 
encourage manufacturers to immigrate; but it will, in a 
correspondent proportion, discourage agriculturists. 

5. If, then, discriminating duties produce any effect upon 
production, it must be by stimulating industry; that is, while 
the amount of capital and the number of laborers remain 
the same, by stimulating men to labor more industriously, 
and thus to create a greater amount of production than they 
would under other circumstances. This, I beheve, is sup- 
posed to be the way in which the system produces its effect. 
This is the point of view in which we shall now proceed to 
consider it. 

The manner in which this is done, is the following: Sup- 
pose a country to be under a free system, and that every one 
is devoting himself to agriculture, commerce, or manufac- 
tures, as he finds it the most for his interest; under these 
circumstances, there will be a certain average of productive- 
ness, both of labor and of capital. Woolen cloth can be 



PROTECTING DUTIES. 127 

procured, by exchange, for five dollars a yard; but it can- 
not, in the present state of the country, be manufactured for 
less than ten dollars a yard; that is, capital and labor are, 
in everything else, so productive, that they could not be 
abstracted from other employments at the same rate of 
profit, unless the manufacturer could receive ten dollars a 
yard for his cloth. Now suppose, that, in order to enable 
him to do this, a duty of five dollars a yard is levied on 
impoi'ted cloth, by which the price of all cloth is raised to 
ten dollars a yard, that it may be in the power of the manu- 
facturer, to employ his capital and labor in this manner. 
There is no doubt that thus the manufacture of cloth 
might be established. 

Now I think it is evident, upon inspection, that the pro- 
ductiveness of labor is not, by this operation, increased. 
The reason why cloth was not manufactured before, was, 
that the productiveness of labor and capital, in this mode 
of investment, was lower than the average productiveness of 
labor and capital in other modes of investment. All that 
has been effected is, to raise the productiveness here to the 
general average elsewhere. There has been nothing done 
to render it any greater, either in this or in any other employ- 
ment; for I presume that no one will contend, that one kind 
of industry should be really more highly paid than another; 
nor that, if it were desired, it could be effected without the 
aid of a direct monopoly. 

But the manufacturer now gets ten dollars for that which 
before would bring only five. Let us inquire whence this 
additional five dollars comes. 

It is evident that government possesses nothing. All that 
it possesses is precisely so much taken from the annual 
revenue of individuals. In this case, therefore, it really 
bestows nothing, but only causes a transfer of annual reve- 
nues, from one party to another. The case is, therefore, the 
same as it would be if, while there had been no duty 



128 PROTECTING DUTIES. 

imposed, every man had been allowed to buy cloth for five 
dollars a yard, but had been obliged, for every yard that he 
bought, to pay five dollars to the manufacturer. It would 
be the same thing to both parties as at present. The con- 
sumer would then, as now, pay ten dollars a yard for cloth, 
and the manufacturer might sell it for five, if he received 
five more as a gratuity. The five dollars that have been 
added to the revenue of the one, are precisely five dollars 
taken from the revenue of the other. 

Now, if this be the fact, inasmuch as what is added to 
the productiveness of the industry of the one class, is taken 
from the productiveness of the industry of the other class, 
it would seem that what the one has gained, the other hag 
lost; and hence, that there can be no increased stimulus to 
industry on the whole, since, by as much as the one is 
stimulated, the other is depressed. But this is not all. 
Wliat you have given to the one class has only raised his 
mode of labor to the point of productiveness at which that 
of all the other classes existed before; while the means by 
which this has been effected, has, to the whole amount of its 
effect, reduced the productiveness of all the other classes 
lower than it was before. By just as much as this produc- 
tiveness has been diminished, by so much has the stimulus 
to industry been, upon the whole, decreased. 

But secondly; As the price of the article is increased, the 
demand for the article is diminished. This has been before 
illustrated. There will, therefore, be less of the article pro- 
duced, because less of it is wanted. By all this diminution 
is the demand for labor diminished ; the price of labor must, 
therefore, fall, and the stimulus to labor be, by so much, 
decreased. 

This effect will take place, in what manner soever the dis- 
criminating duty may operate. Suppose, that from scarcity 
of wool, the price of imported cloth had, without any duty, 
been doubled. The result would have been, that the demand 



PROTECTING DUTIES. 129 

would so have fallen oil, that multitudes would have been 
thrown out of employment, and whole establishments would 
have been ruined. Suppose that, by a duty, we exclude the 
foreign cloth, and make it ourselves, but at double the price. 
There will be a less quantity made than before. But the 
imported cloth was not to be had for nothing. Some of our 
own population were obliged to raise the products which we 
sent in exchange for it. As we do not take their cloth, they 
cannot take our produce. Of course, all those who labored 
in the products which were exchanged for cloth, are out of 
employment. There was a demand for a sufficient amount 
of their labor to purchase one thousand bales of cloth; sup- 
pose, now, there is a demand for labor sufficient to make only 
five hundred bales of cloth. By all the difference, there- 
fore, between the labor necessary to procure one thousand 
bales by exchange, and that necessary to manufacture, or 
procure by exchange,- five hundred bales, is the demand for 
industry diminished, and, of course, the stimulus to industry 
weakened. 

We see, then, what is the tendency of a system of this 
kind. First, so far as the manufacturer is concerned, it can- 
not increase his profit beyond the average profits of every 
other employment; for, if competition be allowed, capital 
and labor will flow into it, whatever may be its advantages, 
until its profits fall to the general level. Secondly, the 
demand for other labor is diminished, by the reduced con- 
sumption created by a rise of price, and also, as this rise of 
price increases the expenses of living, it makes even these 
reduced wages of less value than they were before. Hence 
the tendency is, to reduce the profit of capital and of labor 
in the whole community lower than they were before such 
duty was imposed. To this reduced average, manufacturers 
must themselves conform ; and hence, by this very operation, 
they themselves must suffer. Hence we see the reason why, 
when once a duty is imposed for the protection of a 
6* 



130 PROTECTING DUTIES., 

particular branch of manufactures, it is not long before a 
larger protective duty is demanded; and also why a pro- 
tective duty, which at first is followed by great manufactur- 
ing enterprise and success, is so commonly afterwards 
followed by so universal a depression of manufacturing 
industry. 

This is the result, so far as the effect upon our own country 
is concerned. But this is not all. A rise of prices must, of 
necessity, follow a protecting duty; for this is its very object. 
Its object is, to raise the price of some particular product, 
so that it may be created where it could not be created 
before. If it produce no rise of prices it is useless. Now, 
a rise of prices raises the cost of production, and, by its 
whole effect, must raise the price of every product which 
we create. By this whole eifect, therefore, is our foreign 
market injured. If we can raise cotton at ten cents a pound, 
and bring it into market as cheap as other nations, we have 
as good an opportunity as they for selling it. If we can 
raise it at nine cents, we can undersell them, and supply the 
whole market; or. if we sell it at the same price as before, 
we gain one cent more on the pound. If, by increase of the 
expenses of living, we cannot raise it for less than eleven 
cents a pound, they will undersell us, and we shall be obhged 
to give up the raising of cotton, either partially or altogether; 
and the industry engaged in raising and transporting the 
cotton, and what we receive in exchange for it, must be 
either partially or wholly thrown out of employment. Every 
one must see, that the manufactures of England could be 
afforded much lower: that is, would be able much better to 
compete with those of other nations, if, by abolishing her 
duties on corn, her manufactures could be supplied with the 
necessaries of life at half the present cost. At the same 
profit to the laborer and capitalist, her products could be 
afforded at a price less than at present, by the whole amount 
of the difference in the expenses of living. By this differ- 



PROTECTING DUTIES. 131 



ence, slie would both undersell other nations and increase 
the demand for her manufactures, thus reaping at once a 
double advantage. 

But once more: It is seen that, by such a system, the 
course of industry and of capital in a nation, must be greatly 
changed. Thus, when an article is imported, one class of 
producers must labor to create the article which we exchange 
for it; another class must build ships to transport it; and 
another class must carry on the transportation. By a dis- 
criminating duty, all these classes must, either in whole or 
in part, be thrown out of employment, and this capital be 
either reduced in value, or rendered wholly useless. Now 
this is an injury, both to the capitalist and the laborer. The 
property of the one and the skill of the other are rendered 
useless, and by so much is it a total loss to the country. It 
may be said, let them seek other employments. True; they 
must do this; but this renders it not the less true, that there 
has been so much loss. If a man's house be burned down, 
it is easy to say to him, move into another house; but this 
does not alter the fact, that his house has been burned down, 
and that he has suffered loss to precisely this amount. 

But, suppose he turn to the other employment. It has 
been shown that the average of profit, in this employment, 
cannot be higher than the average of profit was, in the 
employment which he left. He is then no better off than he 
was before, and, in the meantime, he has lost the skill and 
capital which he spent many years to acquire; and he has 
lost them, not as in the case mentioned, by the progress of 
civilization, and with the prospect of bettering his condition, 
but by an act of arbitrary legislation. By all this amount 
of depreciation, therefore, is he, and of course the whole 
country, poorer by the exchange. 

Of Bounties. The principle of bounties is the same as 
that of discriminating duties. The manner in which they 
are bestowed, is the following: If a manufacturer cannot 



132 PROTECTING DUTIES. 

produce cloth for less than ten dollars a yard, and the 
imported cloth can be produced at five dollars, a bounty of 
five dollars a yard is given him, for every yard he manufac- 
tures, or for every yard he exports. The cloth, then, is sold, 
either at home or abroad, at five dollars, and he alsg receives 
five dollars as a gratuity. 

The principal reasons urged above, apply to bounties. 
They are, however, less objectionable for several reasons: 

1. The price of the article is not visibly raised, and the 
consumption, therefore, on this account is not so much 
diminished. 

2. The encouragement given, in this manner, is cheaper; 
that is, we pay only for what is made, while by discrimi- 
nating duties we pay the same whether any thing be made 
or not. We pay a very heavy duty on cutlery in this 
country, while not a thousandth part of the cutlery used is 
made here. It would be vastly cheaper to pay a bounty 
sufficient to raise all the cutlery made in this country to its 
present prices, and it would be, for aught I see, just as good 
for the cutler. The whole effect of this mode of encourage- 
ment is, to pay one man as much more as the bounty amounts 
to, for producing an article, than we should pay another 
man; that is, one man will do it for five dollars, and we 
engage another to do it for five dollars, and give him five 
dollars besides, for the sake of economy. 



CHAPTER VIII. 

FAILURE OF REVENUE TARIFF AND OTHER 
SUBJECTS. 

By Henry C. Carey. 

A letter addressed to President Grant. 



DEAR SIR: — An eminent foreigner, speaking of our 
countrymen, characterized tliem as "tlie people who 
soonest forget yesterday," and that nothing could be more 
accurate is shown by the facts which I propose now to give, 
as follows: — 

The revenue tariff period which followed the close, in 
1815, of the great European war, was one of great distress 
both private and pubKc. Severe financial crises bankrupted 
banks, merchants, and manufacturers; greatly contracted 
the market for labor and all its products; so far diminished 
the money value of property as to place the debtor every- 
where in the power of his creditor; caused the transfer of 
a very large portion of it under the sheriff's hammer; and 
so far impaired the power of the people to contribute to the 
revenue that, trivial as were the pubhc expenditures of that 
period, loans were required for enabling the Treasury to 
meet the demands upon it. Under the protective tariff of 
1828 all was changed, and with a rapidity so great that but 
few years of its action were required for bringing the 
country up to a state of prosperity the like of which had 
never before been known, here or elsewhere ; for annihilating 
the public debt; and for causing our people wholly to forget 

(133) 



134 FAILURE OF REVENUE TARIFF. 

the state of almost ruin from wMch they so recently had 
been redeemed. 

Returning once again, as a consequence of this forgetful- 
ness, to the revenue tariff system, the troubles and distresses 
of the previous period were reproduced, the whole eight 
years of its existence presenting a series of contractions and 
expansions, ending in a state of weakness so extreme that 
bankruptcy was almost universal; that labor was everywhere 
seeking in vain for employment; that the public credit was 
so entirely destroyed that the closing year of that unfor- 
tunate period exhibited the disgraceful fact of commissioners, 
appointed by the Treasury, wandering throughout Europe 
and knocking at the door of all its principal banking houses 
without obtaining the loan of even a single dollar. Public 
and private distress now compelhng a return to the protective 
system w^e find almost at once a reproduction of the prosper- 
ous days of the period from 1829 to 1835, public and private 
credit having been restored, and the demand for labor and its 
products having become greater than at any former period. 

Once again, however, do we find our people forgetting that 
to the protective system had been due the marvelous changes 
that were then being witnessed, and again returning to that 
revenue tariff system, to which they had been indebted for 
the scenes of ruin which had marked the periods from 181 7 
to 1828, and from 1835 to 1842. California gold now, how- 
ever, came in aid of free trade theories, and for a brief 
period our people really believed that protection was a dead 
issue and could never be again revived. With 1854, how- 
ever, that delusion passed away, the years that followed, like 
those of the previous revenue tariff periods, having been 
marked by enormous expansions and contractions, financial 
crises, private ruin, and such destruction of the national 
credit that with the close of Mr. Buchanan's administration 
we find the Treasury unable to obtain the trivial amount 
which was then required, except on payment of most enor- 
mous rates of interest. 



FAILURE OF REVENUE TARIFF. 13'5 

Once again do we find the country driven to protection, 
and the pubHc credit by its means so well established as to 
enable the treasury with little difficulty to obtain the means 
of carrying on a war whose annual cost was more than the 
total public expenditures of half a century, including the 
war with Great Britain of 1812. Thrice thus, with the 
tariffs of 1828, 1842, and 1860, has protection redeemed the 
country from almost ruin. Thrice thus, under the revenue 
tariffs of 1817, 1835, and 1846, has it been sunk so low that 
none could be found '' so poor as do it reverence." Such 
having been our experience through half a century it might 
have been supposed that the question would be regarded 
now as settled, yet do we find among us men in office and 
out of office, secretaries and senators, owners of ships and 
railroads, farmers and laborers, denouncing the system under 
which at every period of its existence, and most especially 
in that of the recent war, they had so largely prospered — 
thereby proving how accurate has been the description of 
them above referred to, as " the people who soonest forget 
yesterday." 

Such being the case, it seems to me that it might be well 
to show what was the actual state of affairs throughout the 
country in the revenue tariff years immediately preceding 
the war, and thereby enable railroad owners to study what 
had been the effect upon their interests that had resulted 
from the cry of cheap iron ; ship owners to see that the 
decay of their interests had been the necessary result of a 
system under which internal commerce had been destroyed: 
laborers to see why it had been that labor had then been so 
superabundant and so badly paid; farmers to see why it had 
been that their farms had then been so deeply mortgaged; 
secretaries to see why it had been that the public credit had 
then been so nearly annihilated; and all to see why it had 
been that the pro- slavery power had so largely grown as 
to have warranted the South in venturing on the late 



13G FAILURE OF REVENUE TARIFF. 

rebellion. To that end, I shall now present two letters 
written in 1858, and addressed to our then president, Mr. 
Buchanan, respectfully asking you to remark the predictions 
that further continuance in the same direction must result in 
financial and political ruin, and in our being driven from the 
ocean, all of which we now see to have been so fully realized.* 

"Civilized communities — those communities, Mr. Presi- 
dent, which have obtained that freedom of domestic inter- 
course which, as you have seen, we so sorely need — follow 
the advice of Adam Smith, in exporting their wool, and 
their corn, in the form of cloth, at little cost for transporta- 
tion. Thus, France, in 1856, exported silks and cloths, 
clothing, paper, and articles of furniture, to the extent of 
$300,000,000; and yet the total weight was short of fifty 
THOUSAND TONS — requiring for its transport but forty ships 
of moderate size, and the services of perhaps 2,000 persons. 

''Barbarous, and semi-barbarous countries, on the con- 
trary, export their commodities in their rudest state, at 
heavy cost for transportation. India sends the constituents 
of cloth — cotton, rice, and indigo — to exchange, in distant 
markets, for the cloth itself. Brazil sends raw sugar across 
the ocean, to exchange for that which has been refined. We 
send wheat and Indian corn, pork and flour, cotton and rice, 
fish, lumber, and naval stores, to be exchanged for knives 
and forks, silks and cottons, paper and China-ware. The 
total value of these commodities exported in 1856 — ^high as 
were then the prices — was only $230,000,000; and yet, the 
American and foreign ships engaged in the work of trans- 
port were of the capacity of six millions, eight hundred 
AND twenty-two THOUSAND TONS, — requiring for their man- 
agement no less than 269,000 persons, f 

* These letters form part of a series entitled " Letters to the I*resident of the 
United States on the Foreign and Domestic Policy of the Union and its Effects as 
exhibited in the Condition of the People and the State." Phila., 1858. 

tThis is the total tonnage that arrived from foreign countries, in that year. A 
email i)ortion was required for the exportation of manufactured commodities, but 
it was so Huuill as scarcely to require notice. 



FAILURE OF REVENUE TARIFF. 13T 

"In tliG movement of all tliis property, Mr. President, 
there is great expense for transportation. Who pays it ? 
Ask the farmer of Iowa, and he will tell you, that he sells 
for 15 cents — and that, too, payable in the most worthless 
kind of paper — a bushel of corn that, when received in 
Manchester, commands a dollar; and that he, in this man- 
ner, gives to the support of railroads and canals, ships and 
sailors, brokers and traders, no less than eighty-five per cent, 
of the intrinsic value of his products. Ask him once again, 
and he will tell you that while his bushel of corn will com- 
mand, in Manchester, 18 or 20 yards of cotton cloth, he is 
obUged to content himself with little more than a single 
yard— eighty -five per cent, of the clothing power of his corn 
having been taken, on the road, as his contribution towards 
the tax imposed upon the country, for the maintenance of the 
machinery of that ' free trade ' which, as you, Mr. President, 
have so clearly seen, is the sort of freedom we do not, at 
present, need.* 

"The country that exports the commodity of smallest 
bulk, is almost wholly freed from the exhausting tax of 
transportation. At Havre — ships being little needed for the 
outward voyage, while ships abound — the outward freights 
must be always very low. 

"The community that exports the commodities of greatest 
bulk, must pay nearly all the cost of transportation. A 
score of ships being required to carry from our ports the 
lumber, w^heat, or naval stores, the tobacco, or the cotton, 
required to pay for a single cargo of cloth, the outward 
freights must always be at, or near, that point which is re- 
quired to pay for the 'double voyage; and every planter 
knows, to his cost, how much the price of his cotton is 
dependent upon the rate of freight. 

*" Thirty-one independent States enjoying a thousand advantages and carry- 
ing on a mutual free trade with each other. That is the 'free trade' that we 
really want." — Buchanan. 



138 FAILURE OP REVENUE TARIFF. 

''In the first of these, Mr. President, employments be- 
come from day to day more thoroughly diversified; the 
various human faculties become more and more developed ; 
the power of combination tends steadily to increase; agri- 
culture becomes more and more a science; the land becomes 
more productive; the societary movement becomes more 
stable and regular; and the power to purchase machinery of 
every kind, whether ships, mills, or the precious metals, 
tends steadily to augment. 

" In the last, the reverse of this is found, the pursuits of 
men becoming less diversified; the demand for human fac- 
ulty becoming more and more limited to that for mere brute 
force, or for the craft by which the savage is so much dis- 
tinguished; the power of association tending to decline; 
agriculture becoming less and less a science, and the land 
becoming more and more exhausted; the societary move- 
ment acquiring, more and more, the fitfulness and irregular- 
ity of movement you have so well described as existing 
among ourselves; and the power to obtain machinery of any 
kind tending steadily to diminish. 

''The first of these, Mr. President, may be found in the 
countries of Central and Northern Europe — ^those which 
follow in the lead of Colbert and of France. All of these 
are gradually emancipating themselves from the most op- 
pressive of all taxes, the tax of transportation. All of 
them, therefore, are moving in the direction of growing 
wealth and power, with correspondent advance in civiliza- 
tion and in freedom. 

"The last maybe found in Ireland, India, Jamaica, Por- 
tugal, Turkey, and these United States — the countries which 
follow in the lead of England. All of these are becoming 
more and more subjected to the tax of transportation. All 
of them, therefore, are declining in wealth and power, in 
civilization, and in freedom. 

"In the first the land yields more and more with each 



FAILURE OF REVENUE TARIFF. 139 

successive year — with constant increase in the power of a 
bushel of wheat, or a pound of wool, to purchase money. 
In the last the land yields less from year to year, with con- 
stant tendency to decline in the price of food and cotton. 
The first import the precious metals. The last export them. 
The first find daily increase of power to maintain a specie 
circulation as the basis of the higher and better currency 
supplied by banks. The last are gradually losing the power 
to command a circulation of any kind, and tending more and 
more towards that barbaric system of commerce which con- 
sists in exchanging labor against food, or wool and corn 
against cloth. 

"We may be told, however, Mr. President, that in return 
for the eighty-five per cent, of his products that, as we see, 
is paid by the farmer of Iowa, and by the Texan planter, we 
are obtaining a magnificent system of railroads — that our 
mercantile marine is rapidly increasing — that, by its means, 
we are to secure the command of the commerce of the world, 
etc., etc. How far all this is so, we may now inquire. To 
me it certainly appears that if this be really the road to 
wealth and power it would be well to require the exporta- 
tion of wheat instead of flour, paddy in place of rice, cotton 
in the seed, corn in the ear, and lumber in the shape of logs, 
rather than in that of furniture. 

"Looking first to our internal commerce, we find a mass 
of roads, most of which have been constructed by help of 
bonds bearing interest at the rate of 6, 8, or 10 per cent. — 
bonds that have been disposed of in the market at 60, 70, or 
80 per cent, of their nominal value, and could not now, proba- 
bly, be resold at more than half the price at which they 
originally had been bought. Half made, and Httle likely 
ever to be completed, these roads are worked at great 
expense, while requiring constant and great repairs. As a 
consequence of this it is that the original proprietors have 
almost wholly disappeared, the stock being of little worth. 



140 FAILURE OF REVENUE TARIFF. 

The total amount applied to the creation of railroads having 
been about $1,000,000,000, and the average present money 
value scarcely exceeding 40, if even 30, per cent., it follows 
that $600,000,000 have been sunk, and with them all power 
to make new roads. Never, at any period of our history, 
have we been, in this respect, so utterly helpless as at present. 
Nevertheless, the policy of the central government looks 
steadily to the dispersion of our people, to the occupation of 
new territories, to the creation of new States, and to the pro- 
duction of a necessity for further roads. That, Mr. Presi- 
dent, is the road to physical and moral decline, and political 
death, as will soon be proved, unless we change our course. 

" The railroad interest being in a state of utter ruin, we 
may now turn to the shipping one, with a view to see how 
far we are likely, by its aid, to obtain that command of the 
commerce of the world so surely promised to us by the 
author of the tariff of '46. Should that prove to be moving 
in the same direction, the fact will certainly afford new and 
stronger proof of the perfect accuracy of your own views, 
Mr. President, as to the sort of freedom we so much require. 

"In a state of barbarism, person and property being 
insecure, the rate of insurance is high. Passing thence 
towards civilization, security increases, and the rate of 
insurance declines, as we see it to be so rapidly doing, in 
reference to fire, in all the advancing countries of Europe. 
Our course, in reference to shipping, being in the opposite 
direction — security diminishing, when it should increase — 
the rate of insurance steadily advances, as here is shown : 

Eates of Insurance upon American Ships. 

1S46. 1S58. 
To Culja, .... IH per cent. . . . 1>^ to 2 per cent. 
" Liverpool, . . . 1% '' . . . 1>^ to 2 
" India and China, . . l^i " . . .21^ " 
To and from Liverpool, on pack- 
et-ships, annual rates, .5 " . . .8 " 

" To what causes, Mr. President, are we to attribute this 
extraordinary change ? ^I ay it not be found in the fact, that 



FAILURE OF REVENUE TARIFF. 141 

the more we abandon domestic commerce, and the larger the 
amount of taxation imposed upon our farmers for the main- 
tenance of transporters, the greater becomes the recklessness 
of those who gain their living out of that taxation ? Look 
back to the last free-trade period — that from 1837 to 1841 — 
and you will find phenomena corresponding precisely with 
those which are now exhibited, although not so great in 
magnitude. At present, the utter recklessness — the total 
absence of conscientious feeling — here exhibited, is such as 
to astonish the thinking men of Europe. Railroad accidents 
have become so numerous as scarcely to attract even the 
momentary attention of the reader, and the loss of life 
becomes greater from year to year. Steamers are exposed 
to the storms of the lakes that are scarcely fit to navigate 
our rivers. Ships that are unfit for carrying insurable mer- 
chandise, are employed in the carriage of unfortunate passen- 
gers, they being the only commodity for whose safe delivery 
the ship-owner cannot be made responsible. Week after 
week the records of our own and foreign courts furnish new 
evidence of dechne in the feeling of responsibility which, 
thirty years since, characterized the owners of American 
ships, and the men therein employed. 

"Look where we may, Mr. President, on the sea or on 
the land, evidences of demoralization must meet our view. 
' Stores and dwellings ' — and here I give the words of a 
New York journal — 'are constructed of such wretched 
materials as scarcely to be able to sustain their own weight, 
and with apologies for walls which tumble to the ground, 
after being exposed to a rain of a few hours' duration, or to 
a wind which possesses sufficient force to set the dust of the 
highways in motion. Entire blocks of edifices are put up, 
with the joists of all so connected with each other, as to 
form a complete train for the speedy communication of fire 
from one to another. Joists are built into flues, so that the 
ends are exposed to becoming first heated, and then ignited 
by a flying spark. Rows of dwellings and warehouses are 



142 FAILURE OF REVENUE TARIFF. 

frequently covered with a single roof, which has not, in its 
whole extent of combustible material, a parapet wall, or 
other contrivance, to prevent the spread of the flames in the 
event of a conflagration.' 

"The feeling of responsibility, Mr. President, grows with 
the growth of real civilization. It declines with the growth 
of that mock civihzation, but real barbarism, which has its 
origin in the growing necessity for ships, wagons, and other 
machinery of transportation. The policy of the central 
government tends steadily towards its augmentation, and 
hence it is that American shipping so steadily dechnes in 
character, and in the proportions which it bears to that of 
the foreigners with whom we are required to place ourselves 
in competition. 

'•Two years since, we were told, that our shipping already 
exceeded 5,000,000 tons ; that we had become the great 
maritime power of the world ; and, of course, that this 
great fact was to be received as evidence of growing wealth 
and power. Last year, however, exhibited it as standing at 
only 4,871,000 tons, and future years are hkely to show 
a large decrease — ships having become most unprofitable. 
More than four-fifths of the products of Western farms and 
Southwestern plantations, are, as we have seen, taken for 
the support of railroads and ships ; and yet, the roads are 
bankrupt, while the ships have done little more, for some 
years past, than ruin the men who owned them. Such being 
the case, it seems little likely, that it is by means of sailing 
ships we are to acquire that control of the commerce of the 
world, so confidently promised when, in 1846, we were led 
to abandon the policy which looked to the creation of a 
domestic commerce as the true foundation of a great foreign 
one. What are the prospects in regard to that higher 
description of navigation which invokes the aid of steam, 
will be shown in another letter. 

Yours very truly, HENRY C. CAREY." 

Gen. U. S. Grant. 
PniLADELPnrA, December 10, 1868. 



CHAPTER IX. 

THE FALLACIES OF THE PROTECTIVE THEORY. 

By Hon. Amasa Walker, LL.D. 
Late lecturer in Amlierst College. 



~r"T"7^E leave now the illustrations of the principles of 
VV protection, as exhibited in the manufacture of iron. 
We believe we have shown the unsoundness of all that 
political philosophy which proposes to substitute artificial for 
natural laws, in production. But there still remains some 
popular arguments, which we will notice. 

1. It is claimed as good policy to protect "an infant 
manufacture " until it is well established, because it will then 
take care of itself, and ultimately confer great wealth on 
the country. Of this it may be said : — 

(a) There is no assurance^ under a system which removes 
the sole test of usefulness and self-support from the produc- 
tion of a people, that enterprises will not spring up which 
never will come to maturity, which have no vital force of 
themselves, which exist solely by reason of the protection, 
and will never become remunerative. If good enterprises, 
why not bad, since the ^ test of bad or good has been with- 
drawn ? In such a rankness of unnatural growth, it is far 
more likely that weeds will be produced than useful plants. 
Thus the whole industry of a country may become perverted 
and falsified by removing the principle of competition. 
There will be no reason for healthful industries to spring up, 

(143) 



144 FALLACIES OF THE PROTECTIYE THEORY. 

which, will not also give life to such as are weak, tardy, 
ephemeral; to such as are parasitic and exhausting. 

(h\ Other things aside, the desirableness of raising the 
''infant" will depend very much on the length of time and 
total cost required to hring it to full age and size. There 
have been nations that exposed sickly and unpromising chil- 
dren, holding it to be for the advantage of the state to rear 
none but such as promised to become vigorous and useful 
members of society. Eeligion and humanity have changed 
this, out of respect for the image of God found in every 
human creature; and now the cripple and the idiot are 
reared tenderly and patiently. But the protective policy 
extends the same kindness and forbearance to industry. No 
matter how plainly palsy, scrofula, or fatuity may appear in 
the form or features, the infant is sure of an affectionate 
solicitude, that only changes to become more anxious as the 
infant gets punier and weaker. 

France protected one of these industrial infants; i. e. the 
beet-sugar culture. Dr. Wayland said of it, in 1837, ''The 
present protection costs one million and four hundred thou- 
sand pounds per annum. Suppose this to continue for 
twenty years, it will amount to no less than twenty-eight 
million pounds sterling ; the interest of which, at five per 
cent., will bring, at two and a half pence per pound, one 
hundred and twenty-six million pounds of sugar, or nearly 
the whole annual amount of sugar now consumed in France." 
In 1865, we can say that this child, born in the early part 
of the great Napoleon's career, has not yet become strong 
enough to walk alone, or hardy enough to take the air.- 
Supposing an equable annual consumption of any article, it 
requires but common school arithmetic to show that a protec- 
tion to the extent of fifty per cent., continuing for eighteen 
years, would amount to a sum, which, at six per cent, inter- 
est, would furnish the nation in that article to the end of 
time, without ever paying anything more for it. A child 



FALLACIES OF THE PROTECTIVE THEORY. 145 

that is so costly to bring up ought to make a very useful 
man; whereas it is generally true that such children have 
to be brought up three or four times over, and then live on 
the poor-rates. If such a protection, however, were to be 
continued only eighteen years, and the necessity for it then 
cease, the industry having become self-supporting, it would 
yet be true that every pound would have two prices, added 
to each other: one, the present cost of making ; the other, 
interest on old protection equal to the present cost. 

In fact, iron and sugar have been protected in this country 
since 1816, and the duties still continue. And all for what? 
Where is the advantage of making a great annual sacrifice, 
for a long time, to establish an industry that will' grow up of 
itself as soon as it will pay, as was growing up slowly, but 
successfully, before there was any protection? 

(c) Finally, no sound and healthful manufacture needs 
protection at ah. The phrase ''infancy" is entirely soph- 
istical, as applied to any branch of legitimate industry. 
Each one comes full-grown and full-armed into life. We 
do not mean that it has no growth, as far as extension is 
concerned. It certainly does go on from town to town, from. 
State to State, out of small beginnings. But there is no 
infancy, so far as completeness or robustness of life is con- 
cerned. Suppose, for example, that there was but one manu- 
facturer of iron in the country, and he produced only to the 
amount of five thousand dollars a year. Yfet, if he could 
bring to the market as good and cheap an article as the 
foreigner, he would be none the worse for being a soKtary 
producer on some mountain' in Pennsylvania. The security 
of any manufacture does not reside in the number of those 
engaged, but in its power 'to meet the public wants. How- 
ever few may be employed, however humble their beginnings, 
they stand simply in their ability to sell a good article at a 
reasonable price, and are as strong in this as ever was the 
proudest guild of London. 
7 



146 FALLACIES OP THE PROTECTIVE THEORY. 

Of course, there is a period in every enterprise when all 
is experiment and outlay. But capital is always ready and 
able to meet the necessity. It belongs to capital to do this; 
for it gets the remuneration of it when the yield begins. 

There is a remarkable confirmation of the truth of these 
remarks in the history of the boot and shoe manufactures of 
the United States. They never asked for protection ; never 
received any notice in all the conflicts for increased tariffs. 
The trade grew up naturally, steadily, and profitably from 
the first; increasing gradually with the growth of the coun- 
try, until, at the present time it is not only the largest, but 
one of the most profitable branches of manufacturing indus- 
try. In Massachusetts alone, this manufacture extends to 
over fifty millions of dollars annually, and is by far the most 
advantageous branch of industry in the State. 

There is another popular argument for protection. 
- 2d. It is claimed that we ought to protect our labor 
against the pauper labor of Europe. 

Does a restrictive tariff do this? Does it prevent the 
laborers of Europe from entering into competition with ours? 
Does it not, in fact, bring them to our very doors? 

For fifty years prior to the date of the first important tar- 
iff, viz.: 1816, there was no immigration of any consequence. 
Soon after this, we began to attract skilled workmen. Some 
were expressly hired to come over to teach us how to spin, 
weave, etc. As we raised the tariff and increased manu- 
factures, the current increased, until it has inundated the 
country. All Europe pours in its starved labor upon us. 

What kind of labor naturally emigrates? The poorest, 
because the better by character and capacity can protect 
itself longer at home. An employer does not turn his good 
men off first. 

Why so large a proportion of Irish? Because theirs is 
the cheapest labor; the first thrown out in any reduction. 
The tide, once turned upon us, kept swelling, till our nation- 



FALLACIES OF THE PROTECTIVE THEORY. * 147 

ality is almost in dispute. This immense immigration never 
came here in obedience to natural laws, but to the legislation 
of Congress. Instead of protecting American labor against 
the pauper labor of Europe, we have brought that labor here 
to meet the American citizen face to face, on a perfect level, 
with equal ci-vil rights, and have given to him the advantage 
of our immense landed capital. Whether this is good State 
policy; whether a forced immigration, in such vast numbers 
as to prevent an easy and natural assimilation with the 
native population, is desirable or not, — it is not our province 
to discuss. That is a political question. It only belongs to 
us to show that no protection has been given to American 
labor. 

3d. It has been gravely said, that the general average of 
all profits is raised by a protective pohcy. 

If true, this is a valuable discovery. It affords the easiest 
known method of making everybody rich at once, and with- 
out effort. Government has only to place sufficient restric- 
tions on trade to carry up profits to one hundred per cent. ; 
and, when all trade has ceased, everybody's profits will be 
immense! 

The folly of such assertions is too apparent to justify any 
considerable notice. 

Where are the enhanced profits to come from? Out of 
the diminished production? Is the whole lessened, and 
every part increased ? So far as protection creates a 
monopoly at the expense of the public, it may, for a while, 
add to the profits of an individual or a class, but only by 
taxing other industries for the purpose. 

4th. But it is urged,' leaving mere argument, do we not 
know that protection especially develops manufactures? and 
are not manufacturing countries found to be, in fact, richer 
than those whicli are more exclusively agricultural ? Both 
propositions are true in an isolated form. 

Other things equal, in a normal state of things, manufac- 



148 FALLACIES OF THE PROTECTIVE THEORY. 

turing communities are older tlian agricultural, and, of 
course, have much greater accumulated wealth. England 
is older and richer than the United States; Massachusetts 
than Ohio. Manufactures arise because a people have a 
dense population, abundant capital, and great industrial 
activity. Under such circumstances great wealth will be 
created, because these are the fit conditions of creating 
wealth. Such creations are natural. 

It is, without question, true, that in an equal manufac- 
turing population will be found a greater accumulation of 
wealth. One important reason of this is, that a larger share 
of the population are engaged in production, and a larger 
amount of capital is employed. Women and children, who 
could earn but little in agricultural labors, can earn much in 
manufacturing. This is one of the most striking results of 
a division of labor, as we have already shown. As we carry 
on agriculture, women and children do httle, though in Con- 
tinental Europe they do much. Agriculture, too, can be 
performed only in certain portions of the year. Manufac- 
turing need never stop, summer or winter, cold or hot, fair 
or foul. This makes a wonderful difference. 

All these, however, are economical advantages, which 
manufacturing communities have, when properly constituted 
and employed. These are reasons which may induce such 
industry; never reasons why it should be compelled. If, 
with so great a superiority, manufactures do not arise freely 
and support themselves fully, it becomes a double argument 
for not forcing them. If such advantage will not secure 
free manufacturing, it is certain that compulsory manufac- 
turing will not secure these advantages, without the sacrifice 
of other interests. 

But all this argument in favor of manufactures, and these 
anticipations of agricultural glut, come out of a false idea of 
what are the natural relations of these two great branches 
of labor. Granted, that manufactures are a desirable form 



FALLACIES OF THE PROTECTIVE THEORY. 149 

of national industry, give a good market for the produce of 
the farm and the mine, and help build up the common 
wealth; yet it is not necessary to bring them on by a forcing 
process, for they come of themselves as soon as profitable. 
We have already shown that certain large classes of manu- 
factured products receive such a natural or local protection 
as insures their home growth. But there are other classes 
which have an encouragement even more liberal. There is 
a principle always operating to bring manufactures out, on 
every part of the earth's surface. It is the impossibility of 
carrying on certain branches anywhere but at the place 
where the article is wanted. The survey, grading, and con- 
struction of railroads and canals, forming as they do an 
immense portion of the public industry, cannot be brought 
within the purview of the custom house. They are neces- 
sarily confined to the field in which these means of trans- 
port are to be used. These may stand as examples of a 
vast class of industry, which arises indifferently to protec- 
tion. So all tinkering, patching, and repairing, great or 
small, must be done on the spot. A glance at any village, 
no matter how intimate its connection with some center of 
trade, will show how large a share of its labor, other than 
agricultural, is employed in its local work; so that, one way 
and another, these classes of manufacturing interests, which 
inevitably come to the community without help of law, form 
a very considerable part of the whole. 

The value of manufactured articles imported, for the four 
years preceding the war of the RebelUon, ranged from one 
hundred and fifty to two hundred millions a year; while the 
• authorities of the Treasury and of the census estimate the 
value of home manufactures at not less .than one thousand 
millions a year, for the same period. Such comparisons are 
necessarily crude; but it would be far within bounds to say 
that four-fifths of all the present consumption of manufac- 
tures would be supplied by our national industry, irrespec- 



150 FALLACIES OF THE PROTECTIVE THEORY. 

tive of protection. All the matter, then, comes to this: 
Shall we impose heavy duties to force labor and capital into 
such channels as shall provide, at great expense, the remain- 
ing fifth of the manufactures we consume? 

5th. Perhaps the most popular plea of all for protection 
looks to "the development of our natural resources." This 
does not propose to increase the gross or net product of 
national industry, does not assume or assert that the labor 
and capital of the country are not well employed at present; 
but it remembers the great mineral and metallic wealth we 
have yet hidden in the Middle States and the West, and it 
sighs for the thought of their usefulness. It regards as 
of no consequence the fact that digging or working the 
ores will not pay. It can only exclaim, " What a pity that 
such great advantage should be unimproved 1 " These 
reasoners would call labor off from t"he rich fields of agri- 
culture, from no other motive than a desire to see our 
wonderful mineral treasures developed. 

The answer to this species of patriotism may be very 
short. Since Nature has taken thousands of years to form 
these ores and store these mines, man can at least take 
time enough to wait till it will pay to dig them. It may 
seem to some a pity they should remain underground; but 
the true cause of the misfortune resides in the fact that we 
have not population enough to settle densely one-tenth of 
our territory. It is a misfortune that wiU cure itself as our 
numbers increase. We can certainly afford to leave for 
future generations what we cannot afford to take for our- 
selves. 

We have said that legal protection may be imposed from 
one or more of four general reasons. 

, We have discussed the first two, viz. : 

To raise a revenue. 

To encourage the growth of certain commodities at home. 

We now come to the remaining reasons, which will de- 



FALLACIES OF THE PROTECTIVE THEORY. 151 

mand but little attention, as their principles have already 
been developed. 

To support existing manufactures. 

Here we leave the expediency of founding special indus- 
tries by a system of protection, and confine ourselves to the 
question, whether, such industries having been begun and 
developed under high tariffs, capital having become so en- 
gaged, labor having become so employed, it is not necessary 
to continue the protection. 

So far as this acknowledges a moral obligation on the 
government to save from loss those who have followed the 
guidance of its laws, it is a question for the statesman. But 
the economist can urge, that, if the burden of such bad 
investments must be borne by the public, it would be pref- 
erable to have it assumed in the shape of direct rehef to the 
manufacturers, rather than by a system which is sure to 
multiply such unfortunate enterprises, and perpetuate their 
weakness. That great caution and forbearance are neces- 
sary, in removing even a false institution, is not a maxim 
which economy has to teach politics. 

And here we come face to face with the great practical 
difficulty of protection in our country; that which, if all its 
principles were triumphantly proved in general reasoning, 
should still throw it out of our legislation. If it were 
proved harmless, if it were proved beneficial, there is a 
strong reason against ever attempting to realize it here. 
That difficulty resides in the varying politics of our coun- 
try. Injurious as protection is to the best interests of the 
country, any system of it, however severe, would be prefer- 
able to the " open-and-shut " policy, absolutely unavoidable 
in a government hke ours. It is not within the bounds of 
reason to suppose that the alternate successes of parties 
will not continue to convulse our national legislation; and 
therefore it is with emphasis true, that a consistent system 
of protection is only possible in a government with great 



152 FALLACIES OF THE PROTECTIVE THEORY. 



conservative force and great central powers. A represent- 
ative body, embracing the most opposite interests, swayed 
by such influences and intrigues as notoriously possess such 
an organization, and changed in all its parts every few 
years, is not the place in which to adjust accurately and 
dispassionately the economical parts of a nation, and dis- 
tribute the agencies of production. 

It is our felicity, that our well-being does not depend on 
such counsels, but that great Nature has fixed the forces 
of industry in perfect harmony, and to the most beneficent 
ends. 

To secure commercial independence. True commercial 
independence is attained by any nation, when its natural 
resources are so developed and cultivated that it becomes a 
power in the world, can command the products of the 
industry of every clime, because it can furnish that which 
all others want. This is independence in commerce. In- 
dependence of commerce is the independence of the savage, 
or of undiscovered countries. To assume that such inde- 
pendence of all mutual helpfulness is desirable, outrages the 
earliest sense of humanity. 

But it is claimed that such a separation from all o£Bces 
of kindness is necessary to protect nations in war. 

So far as the State urges the claims of its own safety, 
the principles of economic science must be silent. But 
this interference with the laws of value, for the preserva- 
tion of the national life, must be strictly limited to the 
absolute necessities of war. 

There are many reasons to suppose, that this interference 
is rarely^ if ever, necessary. There are very few States 
which could not, on occasion, supply from their own soil 
the means of warfare. It would be much better that 
nations should, by anticipation, secure from abroad a suf- 
ficient amount of material, than by indirect efforts distort 
their industiy to an extent many times greater than would 



FALLACIES OF THE PROTECTIVE THEORY. 153 

be involved in obtaining beforehand, by commerce, whatever 
might be necessary. 

But finally and decisively, if it is alleged, under any cir- 
cumstances, to be essential that a nation should possess 
within itself the means of war, we answer that it should 
undertake the manufacture by a special government agency, 
not by changing the entire industry of a people to produce 
this as an incidental result. Such is, in fact, the procedure 
of most, if not all, civilized nations and leaves no force 
in the plea for national independence. But the argument 
for protection from the necessities of war has almost dis- 
appeared in the intenser • light of our growing civilization. 
The independence of each nation in commerce, existing 
harmoniously with its dependence on commerce, forms 
the best hope of peace and tranquility for the future. It 
may be safely assumed, that the probabilities of war be- 
tween any two peoples are inversely as their commercial 
relations. The great reason against war, in the present 
age, is not the expense of maintaining armies, nor the de- 
struction of life, but the interruption of trade. This not 
only puts peacemakers in the councils at home, but makes 
all nations mediators between the parties at variance. 

The intercourse between the United States and Austria 
is but trifling. A little fire would kindle great strife be- 
tween these two peoples. There would be no great motive 
to forbear and adjust the occasions of dispute. The United 
States and England, on the other hand, have a yearly trade 
of four hundred and fifty millions of dollars, which inter- 
poses itself between the nations, however angry, a great 
standing policy of peace. 

All general economic principles urge the extinction of 
war. All special economical interdependences postpone 
and weaken the provocations of war. Resting on this prin- 
ciple, we shall find nothing good in the scheme of making 
nations independent, that they may the better fight. We 



154 FALLACIES OP THE PROTECTIVE THEORY. 

shall recognize commerce as the great bond of human 
brotherhood. 

But, after all argument has been closed on the principles 
of protection, we still find one plea remaining. If freedom 
of intercourse, it is said, were only universal, it would be 
well; but, since it is not, each nation must protect itself, 
and do as it is done by. 

Let us suppose that England refuses to take our wheat. 
Would that be a good reason why we should not take iron 
from her, if we get it so, cheaper than by making it? We 
have already shown that the protected suffers more than 
the excluded community. If England should exclude our 
wheat, whom would she injure? Ourselves somewhat, that 
is, to the extent of the profits we should have made; her- 
seK still more, that is, to the extent of the vastly enhanced 
cost of the grain. If, in retaliation, we exclude her iron, 
whom do we injure? Her somewhat; ourselves much more. 

Let us examine more in detail the consequences of our 
exclusion from foreign ports. If partial, we could still, by 
selling our wheat, get iron cheaper than by making it. 

If total, the closing of our markets for wheat could turn 
our industry towards other forms of production. This 
would constitute one of the conditions under which manu- 
factures would legitimately arise; and it would be more 
sensible and healthful than if it came as the result of our 
own restrictive legislation. 

The full consequences of the poKcy of retaliation would 
be, each people refusing to receive the products of others, 
trade annihilated, industry crippled, aU nations isolated, 
with no mutual interest but robbery and plunder. 

We have said, that England, by imposing a duty, say of 
fifty per cent., on our wheat, would injure us to the extent 
of our possible profits, and herself to the extent of the 
enhanced cost of the grain. On a closer inquiry, we shall 
see that the injury to ourselves is compensated in part; that 
to herself is aggravated. 



FALLACIES OF THE PROTECTIVE THEORY. 155 

The consequence of such a duty would be, that the con- 
sumption would fall off in some degree. Her poor would 
subsist more on potatoes, or other articles cheaper than 
flour. But, notwithstanding these shifts, it would be found 
that it cost her laboring population more to live, even 
though they lived more meanly. Their wages must be 
raised; this is certain. All taxes laid on commodities 
which the laborer must use have the effect to reduce the 
quantity or quality of his food to a certain point; but he 
must live, and his wages must be raised to enable him to 
do so with the enhanced price of wheat. This would make 
it more expensive for England to manufacture her goods, 
and would, in part, so far reduce her ability to compete in 
the markets of the world. By such a policy, she would 
weaken her own industry, and to a degree exclude herself 
from commerce. This would afford another condition 
under which manufactures would legitimately arise in this 
country, whose wheat was excluded. 

That this is no impossible supposition, will be evidenced 
by the condition of England before the repeal of the corn 
laws. The movement in favor of that great measure origi- 
nated in Manchester, and was carried, against the nobility 
and the landed interest, by the resolute efforts of the manu- 
facturing class. 

"What advantage is there in refusing to buy of a nation 
because it refuses to buy of us? It is retaliation and 
revenge, not self-defence or self-vindication. The first 
historical instance of such retaliatory legislation is the 
establishment, by the V^i^Gtians, of customs duties, to de- 
prive foreigners of the benefit of their trade; in return for 
which, Charles Y imposed twenty per cent, duty on all 
Venetian merchandise. The most wise and useful econom- 
ical act of this century, was that by which, by the exertions 
of Mr. Cobden, England and France, so long contending" 
only in exclusions and mutual injuries, threw open their 



156 FALLACIES OF THE PEOTECTIVE THEORY. 

ports to tlie free entry of hundreds of articles, to tlie com. 
mon benefit of both, and to the advancement of good f eehng 
and hearty alliance; a measure^ that, between the years 
1859 and 1863, increased by seventy-three per cent, the 
trade of Great Britain with France, while proving no less 
beneficial to the labor of the latter country. 

We infer, from all that has preceded, that, "protection" 
is an unfortimate expression. To restrict industry, to put 
the bad on the level of the good, to remove from industry 
its only guaranty of a full reward, to contract trade and 
neutralize the gifts of Nature, is not protection, in any 
proper sense of the word. 

In conclusion of the subject, it may be proper to allude 
to the great natural characteristics of our national indus- 
try. We see that the importa,nt fact of our condition is 
unequaled agricultural power. Possessing such an advan- 
tage, with an active, enlightened, and enterprising popula- 
tion, and an industry perfectly untrammelled, we should 
naturally become the granary of the world, and create, as a 
certain consequence, the most extensive and powerful com- 
mercial and naval marine on the globe. We should secure, 
by sea and land, a greater power to give help to friends, or 
hurt to foes, than any other people, and should rapidly attain 
our best national condition. 

We should have, not only the most profitable, but the 
most salutary industry, as favorable to the acquisition of 
unlimited wealth as to a sound physical development and 
high moral culture. We should have manufactures, also, in 
their spontaneous growth. They would arise — they were 
arising previous to any tariff — as fast as the best interests of 
the country required them. 

States and sections, like New England, would naturally 
and profitably undertake manufactures, because they have a 
thinner soil, a denser population, and a larger capital rela- 
tively, than others. Such regions would be the work-shops 



FALLACIES OF THE PROTECTIVE THEORY. lo7 

of the nation, while the prairies of the West and the rich 
uplands of the Middle States would be the nation's farms. 

"What manufactures arise of themselves should be welcomed, 
for they come in obedience to natural laws; they are founded 
on extraordinary facilities, on high natural protection, on 
local necessities. But we bind the swelling thews of the 
youth when we endeavor to force on America the industry 
of Europe. We grow enough every year to cover some of 
the kingdoms of the old world. Every year's growth 
stretches over and appropriates some country, fertile as the 
plains of the Nile, and bearing every manner of precious or 
useful ore. Here is our destiny. This is our wealth. 

It cannot be too often repeated, because it is the great 
fact in regard to manufactures, that they only need to be 
''let alone." When a distinguished French minister of 
finance called the manufacturers of that country to Paris, 
and asked what he could do for them, they made the well 
known answer, '' Laissez nous faire.'''' It is within our per- 
sonal knowledge that when the proposal was made to impose 
the protective tariff of 1816, the leading manufacturers of 
Rhode Island, amongst whom was the late Mr. Slater, the 
father of cotton-spinning in this country, met at the counting- 
room of one of their number, and, after deliberate consultation 
upon the matter, came unanimously to the conclusion that they 
had "rather be let alone." Their business had grown up 
naturally, and succeeded well; and they felt confident of its 
continued prosperity, if uninterfered with by government. 
On the other hand, they argued that by laying a protective 
tariff the business would be thrown out of its natural chan- 
nels, and become fluctuating and uncertain. How well 
founded were these anticipations subsequent events have 
fully shown. 

It will, doubtless, be a matter of profound astonishment 
to the future historian that a people who had a free and 
untrammeled industry, with natural advantages for the 



158 FALLACIES OF THE PROTECTIVE THEORY. 

most productive agriculture in tlie world, and for the legiti- 
mate growth of every kind of manufacture, should ever 
have asked for restrictions upon trade. But, in truth, they 
did not ask for protection at the outset. It was forced upon 
them by politicians, irrespective of their wishes, for the 
avowed purpose of securing a home market for cotton. 

All New England was opposed to the policy, and protested 
against it; yet it was carried. Special forms of manufactur- 
ing were brought into existence; and, as these were sickly 
and needed all the help they could obtain from government, 
an interested party was formed which clamored incessantly 
for protection. Yet it was not until the third tariff, that of 
1824, had gone into operation, that the Northern and Cen- 
tral States became the partisans of protection. As New 
England was the last to assent to restrictive legislation, so 
she will undoubtedly be the first to ask for its abandonment. 
No policy could be more adverse to her permanent interests. 
She has great natural advantages for manufacturing. With 
these, she can carry them on successfully. By high protec- 
tive duties other sections of the country not having the same 
natural advantages will be led to introduce the same 
branches of industry,* and she will find her severest com- 
petition at home; while all parts of the nation will be crip- 
pled by a false system, equally against the laws of nature 
and value; since protection, as previously shown, puts the 
bad on a le^feel with the good, and destroys all natural tests 
of usefulness in production. It should always be borne in 
mind that protective duties must be high enough to enable 
the home manufacturer to get at least average profits; that 
is, such profits as commodities in general afiord. He will 
not make broadcloth unless it is as profitable as any other 
branch of trade, manufacture, or agriculture. Nothing 
short of this is protection; and the duties must be carried 
upwards until they arrive at that point in which those who 

* This is already becoming quite api)arent. 



FALLACIES OP THE PROTECTIVE THEORY. 159 

are manufacturing to the greatest disadvantage can make aver- 
age profits; otherwise there will be a call for higher duties. 
This is one of the practical difiBculties of protection. The 
higher the duties imposed the greater will be the rush into 
the protected branch of industry; and none will be satisfied 
until they make the business profitable, however imperfectly 
conducted. Hence there will be a constant call for increased 
duties. Witness the history of protection in the United 
States, — a tariff in 1816, a higher one in 1820, higher yet in 
1824, still higher in 1828, with continued changes from that 
time to this. 



CHAPTEE X. 

THE DOCTEINE OF INTERNATIONAL EX- 
CHANGES: THE LIMITS OF FREE TRADE 
AND THE PROTECTIVE SYSTEM.* 

By Prof. Francis Bowen, 

Alford Professor of Natural Religion, Moral Philosophy, and 
Civil Polity in Harvard University. 



IT has now been shown that prices are determined by the 
relation of the demand to the supply, and that an ex- 
tension of the market, or an increase of the demand, can be 
obtained only by submitting to a fall of prices, so as to bring 
the article within the reach of a greater number of consum- 
ers. In any market only a certain quantity of goods at a 
given price can be consumed; if more goods are forced upon 
the market than it naturally requires, the price must fall, and 
then the consumption may be very much increased. 

It has also been proved that we really purchase commodi- 
ties with commodities ; that we pay for our whole imports 
with our whole exports; that if, in our traffic with any one 
country, our imports much exceed our exports, then we pay 
the balance, not in money, but by transferring to that coun- 
try the debt due to us from another country with .which our 
trade is such that our exports exceed our imports. It is 
only the balance of the immensely long '' account-current" 
of our trade with all foreign countries whatsoever which is 
struck in money ; and this cash balance cannot be more than 
an insignificant fraction of either side of the account. 

* American Political Economy, 1870 Edition. 

(160) 



INTERNATIONAL EXCHANGES. 101 

The advocates for free trade have always insisted that 
we must buy merchandise of England, not only to induce, 
but even to enable England to buy merchandise of us; that 
we must buy of any country in order to sell to her, and 
must buy as much as we sell. But it is not so. It is 
not necessary that we should take enough of English 
manufactured goods to pay us for all the cotton, tobacco, 
and wheat which we sell to England. England is able, though 
of course she is not very willing, to pay us the balance in 
tea from China, coffee from Brazil, hemp from Russia, or 
whatever other article, from whatever other country, we see 
fit to require. We can compel her to pay us in whatever 
commodities we may select; for the articles which we sell to 
England, cotton, tobacco, and wheat, are of prime necessity 
to her, and most of them she cannot obtain elsewhere. As 
our exports must pay for our imports, the only point to be 
considered is, how we can dispose of the exports to most 
advantage, or obtain for them the largest return of the 
Imports. 

The cost to us of our domestic products is, the labor that 
is expended upon their production. But the cost to us of 
foreign products is, not the labor which has been expended 
upon their production, but the labor which we must expend 
upon the articles that are given in exchange for those 
products. 

" The advantage of an interchange of commodities between 
nations," says Mr. Mill, ''consists simply and solely in this, 
— that it enables each to obtain, with a given amount of 
labor and capital, a greater quantity of all commodities taken 
together. This it accompHshes by enabling each, with a 
quantity of one commodity which has cost it so much labor 
and capital, to purchase a quantity of another commodity, 
which, if produced at home, would have required labor and 
capital to a greater amount. To render the importation of 
an article more advantageous than its production, it is not 



162 INTEENATIONAL EXCHANGES. 

necessary that the foreign country should be able to produce 
it with less labor and capital than ourselves. We may even 
have a positive advantage in its production; but if we are 
so far favored by circumstances as to have a still greater 
positive advantage in the production of some other article 
which is in demand in the foreign country, we may be able 
to obtain a greater return to our labor and capital by employ- 
ing none of it in producing the article in which our advan- 
tage is least, but devoting it all to the production of that- in 
which our advantage is greatest, and giving this to the 
foreign country in exchange for the other. It is not a 
difference in the absolute cost of production, which deter- 
mines the interchange, but a difference in the comparative 
cost." 

The inhabitants of Barbadoes, for instance, favored by 
their tropical cKmate and fertile soil, can raise provisions 
cheaper than we can in the United States. And yet Barba- 
does buys nearly all her provisions from this country. Why 
■ is this so ? Because, though Barbadoes has the advantage 
over us in the ability to raise provisions cheaply, she has a 
still greater advantage over us in her power to produce sugar 
and molasses. If she has an advantage of one-quarter in 
raising provisions, she has an advantage of one-half in 
regard to products exclusively tropical ; and it is better for 
her to employ all her labor and capital in that branch of 
production in which her advantage is greatest. She can 
thus, by trading with us, obtain our breadstuffs and meat at 
a smaller expense of labor and capital than they cost our- 
selves. If, for instance," a barrel of flour cost ten days' labor 
in the United States, and only eight days' labor in Barba- 
does, the people of Barbadoes can still profitably buy the 
flour from this country, if they can pay for it with sugar 
which cost them only six days' labor; and the people of this 
country can profitably sell them the fiour, or buy from them 
the sugar, provided the sugar, if raised in the United States, 



INTERNATIONAL EXCHANGES. 163 

would cost eleven days' labor. This is a striking example 
to show the "benefit of foreign trade to both the countries 
which are parties to it. The United States receive sugar, 
which would have cost them eleven days' labor, by pajdng 
for it with flour which costs them but ten days. Barbadoes 
receives flour, which would have cost her eight days' labor, 
by paying for it with sugar which costs her but six days. . 
If Barbadoes produced both commodities with greater facil- 
ity, but greater in precisely the same degree, there would 
be no motive for interchange. 

Now let us apply these principles to the trade between 
England and the United States. To simplify the matter, 
we will take but one article, flour, as representing all the 
commodities that America sells to England ; and but one 
article, cloth, as representing all the goods which England 
sells to America. Suppose, on account of the respective 
advantages possessed by the two countries, that the produc- 
tion of one barrel of flour in England costs as much labor 
and capital as would suffice for the manufacture of ten yards 
of cloth ; while in America, one barrel of flour can be pro- 
duced for three-fifths of its cost in England, — that is, for as 
much labor and capital as would, in England, manufacture 
only six yards of cloth. 

Now, if a system of free trade between the two countries 
be established, the two commodities will be exchanged for 
each other at the same rate both in England and America. 
The price will be equalized between the two countries ; but 
at what point will it be equalized ? Shall the Enghsh price 
be established in America, or shall the American price be 
estabhshed in England? Or shall a price intermediate 
between the two be established ? Either of these three 
suppositions is' possible. The Englishman can afford to give 
ten yards, for it will cost him that amount of labor and 
capital to produce the flour in his own country, or for him- 
self. On the other hand, the American can afford to sell 



164 INTERNATIONAL EXCHANGES. 

the flour for six yards, because this quantity of cloth, if 
produced in his own country, would cost him more than the 
flour. Suppose that, by the higgling of the market, the 
price in both countries is fixed at seven yards. The advan- 
tage of the trade is then shared between the two countries, 
but it is shared unequally. America gains one yard on each 
barrel, as she now receives seven yards of cloth for the labor 
which formerly produced but six ; England gains three 
yards on each barrel, for the flour now costs her but seven 
yards a barrel, while it formerly cost her ten. We will 
suppose that, at these rates, America sells 100,000 barrels 
of flour to England, and receives in exchange, of course, 
700,000 yards of cloth. The demand on each side must be 
just sufficient to carry off the supply received on the other. 
So long as England wants only this amount of flour, and 
the United States only this quantity of cloth, the inter- 
change will continue at this rate, giving three-fourths of 
the profits to Great Britain, and only one- fourth to this 
country. 

But suppose the demand to vary in one of the two 
countries ; suppose that England, on account of the increase 
of her population, now needs 150,000 barrels of flour, which 
America is perfectly able and willing to furnish. But Eng- 
land can pay for this larger purchase only by sending over 
more cloth ; the United States, however, by the supposi- 
tion, are fully supplied with the 700,000 yards which they 
received before ; they cannot buy any more at the old rate 
of seven yards for one barrel. How, then, is England to 
obtain the additional quantity of flour that she needs ? She 
has but one course to pursue; she must offer her cloth at 
a reduced price, knowing that this reduced price will bring 
it within the reach of a larger class of consumers. Instead 
of seven, she will now offer nine yards of cloth for a barrel 
of flour. At this price, the Americans may be willing and 
able to buy 1,350,000 yards of cloth, which will furnish the 



INTERNATIONAL EXCHANGES. 165 

150,000 barrels of flour required by England ; or, if we do 
not need this large quantity of cloth, England has only to 
sell this quantity, at the reduced price, to other countries, 
and obtain in exchange for it tea, coffee, sugar, and other 
products, which, at this reduced price again, we do need. 
If we do not receive the benefit of the change of price in 
cloth, we shall receive it in other commodities. 

There is, indeed, one other mode by which England might 
obtain the additional quantity of flour required, without 
lowering the price of her cloth. Suppose that the demand 
of the United States for cloth had been kept down to 
700,000 yards by a protective tariff, the revenue from which 
paid the expenses of the government, though it somewhat 
enhanced the price of cloth to the people. Suppose, further, 
that the government, learning that England was inclined to 
purchase more flour of us, in order to favor that inclination, 
should determine to abolish the tariff, and admit cloth duty 
free, or at a nominal duty. Then, indeed, the demand for 
cloth might be so far increased, that England might obtain 
her 150,000 barrels of flour by paying for it at the rate 
of seven yards to a barrel. We should, indeed, sell the 
increased quantity of breadstuffs, but should receive for it 
only 1,050,000, instead of 1,350,000, yards of cloth. By 
this act of legislation, also, we should be obliged to pay the 
expenses of the government by direct taxation, should have 
our domestic manufactures ruined, and the profits of the 
agriculturists much diminished by the influx into their busi- 
ness, and the consequent competition, of the disbanded 
workmen from the manufactories. 

America produces chiefly raw material, because she has 
the advantages of a more extensive territory and a more 
fertile soil ; England produces chiefly manufactured goods, 
because she has the advantages of more capital, longer expe- 
rience, and cheaper labor. Now the doctrine of free trade 
(which is a perfectly sound and just doctrine, if applied to two 
countries that are similarly situated in every respect), if 



166 INTERNATIONAL EXCHANGES. 

applied in this case, would teach the Americans to give them- 
selves exclusively to the production of raw material, and the 
English exclusively to manufactures, on the ground that each 
could purchase of the other what it would then need, more 
profitably than it could produce that article for itself. Let us 
suppose that the Americans adopt this advice, and raise noth- 
ing but raw material. What will be the consequence ? 

As every civilized nation must consume more value vested 
in manufactured goods than in raw material (without reckon- 
ing tea, coffee, and tropical products, which must be brought 
from abroad), it is evident that we must be constantly pressed 
to purchase from foreign countries more than we can easily 
pay for by selling to them raw material. In order, then, to 
enlarge the foreign market for our cotton, tobacco, and flour, 
we must offer them on the most favorable terms. We must 
offer them at the American price, say of one hundred-weight 
for six pounds of manufactures, rather than at the foreign 
price, which they would otherwise naturally assume, of one 
hundred-weight for ten pounds. At .this foreign price, it 
may be assumed that we should procure only 200,000 pounds 
of manufactured goods, — not enough to supply our wants. 
But in order to obtain more, we must be able to sell more; 
and in order to sell more, we must offer the raw material at 
a lower price, so as to enable a greater number of foreigners 
to purchase it. The principle is, then, that whichever nation 
is under the strongest temptation or necessity to buy from 
others, — whichever needs to buy more value than it can 
readily sell, — that nation labors under a disadvantage in the 
traffic, and must offer its own commodities at the lowest 
possible price. 

''At the lowest price which is possible," we say; for the 
theory shows clearly that there are limits beyond which the 
price can neither be elevated nor depressed. We cannot 
sell for less than six pounds, because the cost of producing 
a hundred -weight of raw material would, with all our dis- 
advantasies in manufacturing, enable us to manufacture six 



INTERNATIONAL EXCHANGES. 167 

pounds of such goods for ourselves. Neither can we obtain 
more than ten pounds, because the labor and capital bestowed 
on eleven pounds of these goods would enable the English, 
in spite of their disadvantages in regard to raw produce, to 
raise one hundred -weight of it for themselves. Within 
these limits, then, is the sphere of operation of a protective 
taariff; beyond them is the sphere of free trade. Prohibitory- 
duties are always unwise; for the object is to check con- 
sumption, not to destroy foreign trade. 

The purpose of a protective tariff is to secure to each 
nation the use of its own natural advantages; or rather, to 
prevent it from throwing these natural advantages away by 
too assiduous and exclusive cultivation of them, the effect of 
which would be, that the other arts and branches of industry 
would perish by neglect. A community cannot prosper by 
devoting all its energies to the cultivation of but one of the 
three great branches of industry. Devoted to agriculture 
alone, or to manufactures alone, or to commerce alone, it 
makes no difference; — in either case, it will have but one 
class of articles to sell, while it will have two classes of 
articles to purchase; — in either case it will have a greater 
surplus of one kind to dispose of, than other nations will be 
willing or able to purchase, except at the lowest possible 
price; — and to sell at the lowest possible price, as we have 
now demonstrated, is to sacrifice the whole of the natural 
advantage with which we are endowed by nature, and to put 
ourselves on a par with other countries in this respect, while 
we are below them in every other respect. 

That the protective policy here advocated is consistent with 
the doctrines of political economy, as that science is usually 
taught in Europe, must appear from the limitations of the , 
theory already laid down, and from the fact that this theory 
is frankly accepted even by those English economists who 
stoutly maintain the general doctrine of free trade. For 
proof, I quote from John Stuart Mill. 



168 INTERNATIONAL EXCHANGES. 

''If it be asked," he says, "what country draws to itself 
the greatest share of the advantages of any trade it carries 
on, the answer is, — ^the country for whose productions there 
is in other countries the greatest demand, and a demand the 
most susceptible of increase from additional cheapness. In 
so far as the productions of any country possess this 
property, the country obtains all foreign commodities at less 
cost. It gets its imports cheaper, the greater the intensity 
of the demand in foreign countries for its exports. It also 
gets its imports cheaper, the less the extent and intensity of 
its own demand for them. The market is cheapest to those 
whose demand is smaU. A country which desires few 
foreign productions, and only a limited quantity, while its 
own commodities are in great request in foreign countries, 
will obtain its limited imports at extremely small cost, — that 
is, in exchange for the produce of a very small quantity of 
its labor and capital." 

Consequently, he argues, " the opening of a new branch 
of export trade; or an increase in the foreign demand for 
our products, either by the natural course of events, or by 
an abrogation of duties; or a check to our demand for 
foreign commodities by the laying on of import duties at 
home, or of export duties elsewhere;— these, and all other 
events of similar tendency, would make our imports no 
longer a balance for our exports; and the countries which 
take our exports would be obliged to offer their commodities 
(specie among the rest) on cheaper terms, in order to 
re-establish the equation of demand; and thus we should 
obtain money cheaper, and acquire a generally higher rate of 
prices. Incidents the reverse of these would produce effects 
the reverse, — would reduce prices." 

It appears, then, that it is even more for the interest of 
American planters and agriculturists, than of the manufac- 
turers themselves, that duties should be laid on the importa- 
tion of foreign manufactured goods, so as to restrict the 



IxNTERNATIONAL EXCHANGES. 169 

amount of such importation. We thus purchase our imports 
more cheaply, or, what is the same thing, as commodities 
are actually bartered for commodities, we sell our exports at 
a higher price. The effect of the duty is, not to raise the 
price of the imported articles, but to cheapen them, the duty 
actually falling in great part upon the foreign manufacturer. 
For instance: What would be the probable effect of rais- 
ing the duty froni 10 to 35 per cent, upon all the imported 
articles which come in competition with American manufac- 
tures? Suppose the value of such articles did not exceed 
200 millions; the other imports being of such commodities, 
— tea, coffee, drugs, raw materials, and the like, — that we 
should be obliged, under any circumstances, to purchase 
them of foreigners. Even if the heavier duty on the com- 
peting articles should reduce the amount imported to 100 
millions, the revenue of our own government would be 
much increased by the alteration. But England, from whom 
we import most of the competing goods, would still need to 
obtain from us as much vegetable food, tobacco, and cotton 
as ever ; and her sale of her own manufactures to the United 
States being diminished to the extent of 100 millions, she 
would be obliged to offer to all nations, the United States 
included, these manufactures, and other commodities also, 
at lower prices. Compelled to seek an extension of the 
foreign market for whatever she has to sell, she must submit 
to a reduction of price, in order to bring her commodities 
within the reach of a larger class of consumers. American 
consumers, for instance, would not take even half as much 
as before, if the price in this country were enhanced to the 
full extent of the additional duty, — that is, 25 per cent. 
England would have to bear probably 15 per cent, of this 
duty, or to reduce her prices in this proportion, leaving the 
American price to be enhanced 10 per cent., which would 
be encouragement enough to set additional manufactories in 
8 



170 INTERNATIONAL EXCHANGES. 

motion in the United States, so as to produce at home the 
50 millions' worth cut off from our imports. 

Already, then, we see the fallacy of the oft-repeated 
assertion by the advocates of free trade, that a protective 
duty raises the price both of the home commodity and of 
the foreign one which continues to be imported, to the full 
extent of that duty. If the impost be not so great as to be 
virtually prohibitive, — in which case we admit it would be 
impolitic, — the home price cannot be increased to the extent 
of more than one-half, seldom more than two-fifths, of the 
duty. Everywhere the inequality in the distribution of 
wealth is such, that the class of persons having an Income, 
for instance, of $2,500 a year, is not, as we might be 
tempted by a superficial glance at the subject to beHeve, only 
25 per cent, less numerous than the class having $2,000 a 
year ; but is probably not more than half as large. If, then, 
the price should rise to the full extent of the duty, say 25 
per cent., the total consumption would not be more than half 
as great, as only those would buy who have an income at 
least one-fourth larger than the smallest income possessed by 
any of the former purchasers; but a portion of what is con- 
sumed being now of home production, the importation of 
tho article would fall off more than 50 per cent. 

This reasoning, it is true, applies only to the somewhat 
finer and more costly articles of manufacture, for which 
alone a protective duty is needed. In respect to bread stuffs 
and other articles of prime necessity, we have already seen 
that a very considerable enhancement of price is needed, in 
order materially to lessen the consumption. The sale of the 
cheaper and more common products of manufacturing 
industry, also, may not be much checked by an addition of 
20 or 30 per cent, to their price, as their cost forms but a 
small part of the total expenditure of any class of persons. 
But the principle holds true in the only cases in which we 
need to apply it. 



INTERNATIONAL EXCHANGES. 171 

The situation of the United States is so pecuhar, that 
arguments drawn from European experience for the guid- 
ance of American legislation are apt to be wholly fallacious 
and unsound. We can more profitably go for a lesson to 
the other side of the habitable globe; I mean, to British 
India. There we find a deficiency of capital, an abundance 
of fertile territory, a consequent surplus of agricultural 
produce, and a lack of that skill in manufacture which can 
only be gained by long experience under a strict protective 
policy, such as England has enjoyed for nearly two cent- 
uries ; — all these circumstances strongly reminding us of 
corresponding features in our own condition. Now, the 
Governor of India, in a correspondence with the East India 
Company on the subject of the Dacca weavers, made this 
statement: '' Some years ago, the East India Company 
annually received of the produce of the looms of India to 
the amount of six to eight million pieces of cotton goods. 
The demand gradually feU, and has now ceased altogether. 
European skill and machinery have superseded the produce 
of India. Cotton piece-goods, for ages the staple manufac- 
ture of India, seem forever lost; and the present suffering 
to numerous classes in India is scarcely to be paralleled in 
the history of commerce." 

This example throws Hght upon another reason, already 
urged in another place, for the establishment of a protec- 
tive policy in America, as well as in India ;-^ I mean, the 
great difference in ,the cost of transportation between raw 
materials and manufactured goods, which operates greatly to 
the advantage of the cpuntry producing the latter, because 
manufactures have much the greater value in the smaller 
weight and bulk. Rice, wheat, cotton, and sugar are among 
what might be called the' greatest natural exports of India, as 
they are produced there very cheaply in great abundance. 
The average price of wheat at Calcutta is less than fifty cents 
a bushel; but the freight and other charges of transporting 



172 INTERNATIONAL EXCHANGES. 

that bushel to England, and selling it there, amount to about 
eighty cents. England, therefore, though she has abolished 
her corn laws, enjoys a virtual protective duty against wheat 
from India, amounting to one hundred and sixty per cent. 
The cost of transporting English manufactured goods to 
India, cannot, on an average, exceed forty per cent, of their 
value. The difference between these two rates, amounting to 
one hundred and twenty per cent., is, of course, really pro- 
hibitive in its effects; and India wheat is not brought to 
England at all. 

The difference in the cost of transporting raw materials 
and manufactured goods across the Atlantic is certainly not 
so great as in sending them round the Cape of Good Hope; 
but it is enough to give a very important advantage to the 
traffic to England. Our chief article of export, raw cotton, 
is a very bulky one ; and even breadstuffs and tobacco are 
more expensive, both for land and sea carriage, than the 
cheapest manufactures of the loom. On the very prin- 
ciples of free trade, which means nothing but trade with 
equal advantages to the two parties, we ought to levy a con- 
siderable protective duty, in order to make up the difference 
in the cost of transportation. 

I have already alluded to the fact, that a protective duty, 
being designed as a check to injurious fluctuations of price, 
is graduated with reference to the lowest price at which 
the foreign commodity is ever sold, and not with reference 
to the average price. Thus a duty of thirty, may not raise 
the average price more than fifteen per cent. ; and this last 
may be the whole amount of real protection that the Amer- 
ican manufacturer needs. But to secure this protection at 
all times, the duty must be fixed at thirty per cent., because 
circumstances may sometimes force the foreign commodity 
upon the market at a price fifteen per cent, below its 
ordinary value. Thus, a temporary excess of production, 
or the reaction after a commercial crisis, may flood the 



INTERNATIONAL EXCHANGES. 173 

English market, for a wMle, with, mannfactured goods. 
These must be got rid of, even at a great sacrifice; and their 
owners prefer to send them abroad to be sold, rather than to 
lower prices by forced sales in the home market. Hence, 
foreigners can often purchase British manufactures at a less 
price than the English themselves. The inji^rious effect of 
a forced sale is thereby only transferred from the Enghsh 
to the American market. Prices here may be depressed to 
a ruinous extent for a time, only to recover their former 
level, or even to rise above it, after the mischief has been 
done of driving American manufactures out of the busi- 
ness. The proper object of legislation, in regard to the 
admission of imports, is to prevent injurious fluctuations of 
prices. 

The disturbing effect produced by a temporary glut of the 
imported commodity may be much larger than its cause 
would seem to warrant; for the quantity thus thrown upon the 
market need not be large. But, as we have seen, taking 
away a third part of the supply may either double the price, 
,or fail to raise it even one-sixth, according as the article is 
one of prime necessity, or one which people can easily do 
without. In like manner, making the stock of goods on 
hand one-third larger than usual may sink the price, not 
tnerely in proportion to that increase, but to one-half of its 
former amount. Then the whole stock, both foreign and 
domestic, must be sold at this ruinous sacrifice. 

"To give the monopoly of the home market," says Adam 
Smith, "to the produce of domestic industry, in any particu- 
lar art or manufacture, is in some measure to direct private 
people in what manner they ought to employ their capitals, 
and must, in almost all cases, be either a useless or hurtful 
regulation. If the produce of domestic can be bought there 
as cheaply as that of foreign industry, the regulation is 
evidently useless. If it cannot, it must generally be hurt- 
ful. It is the maxim of every prudent master of a family, 



174 INTERNATIONAL EXCHANGES. 

never to attempt to make at home what it will cost "him more 
to make than to buy. The tailor does not attempt to make 
his own shoes, but buys them of the shoemaker. The shoe- 
maker does not attempt to make his own clothes, but 
employs a tailor. What is prudence in the conduct of 
every private family, can scarce be folly in that of a great 
kingdom." 

The comparison of individuals with communities is often 
a faulty and deceptive one, and is particularly so in this 
case. Certainly it would be unwise in an individual to be 
Ms own weaver, tailor, carpenter, and blacksmith; he would 
thus lose all the advantages of a division of labor, and would 
not become skilled in any department. But this objection 
does not hold in the case of a community, which has only a 
fictitious unity, and is really made up of many individuals, 
who may distribute among themselves all the employments 
which are requisite for the production of all the commodi- 
ties that the society needs. No one person is thus required 
to practice more than one art, and the division of labor 
among these individuals is as perfect as if the same number 
of trades were partitioned out among so many distinct com- 
munities. Still more, as communities are often separated 
from each other by broad tracts of sea or land, should each 
one confine its industry to the production of a single com- 
modity, and purchase whatever else it needs from rival 
States, all its articles of consumption, one alone excepted, 
would come to it burdened with a heavy cost of transporta- 
tion; and the sale of its own single product everywhere but 
at home would be impeded by an addition to its cost from 
the same cause. All the advantages of a division of labor 
result from a separation of employments among individuals, 
and become disadvantages in the case of distinct States, 
counties, and even towns. To one who is a blacksmith, it is 
no help, but rather a hindrance, that his next-door neighbor 
is a blacksmith also; he has thus a competitor in satisfying 



INTERNATIONAL EXCHANGES. 175 

the wants of Ms own village, where every mechanic finds 
his best and most profitable customers; and as blacksmiths' 
work is heavy, he cannot carry his wares for sale even to 
the next county or town without lessening his profits. 

The inhabitants of every country town understand their 
own interests much better than Adam Smith did. Instead 
of forming themselves into a settlement composed exclusively 
of artisans of one trade, each community has its own mason, 
shoemaker, carpenter, shopkeeper, lawyer, doctor, and clergy- 
man, and is thus not obliged to send a dozen or twenty miles 
in order to have a horse shod, a chimney built, a tooth 
pulled, or a marriage celebrated. A Yankee farmer, with 
half a dozen stout sons, acts upon the same principle, in not 
educating them all to his own employment, but making a 
mechanic of one, a merchant of another, a sailor of a third, 
sending a fourth to college, and keeping only one at home 
to be his own successor upon the farm. As all occupations 
are precarious, he knows that, by this course, he multiplies 
the chances of success, or reduces the chances of failure, 
for the whole family, besides suiting each member of it 
with an employment best adapted to his peculiar powers and 
inclination. 

We may ask if it be not as reasonable for a nation, as it 
confessedly is for an individual, to enter upon a course of 
education, or serve an apprenticeship. During the period of 
discipline, the gains will be small, the labor severe, and 
perhaps the expenses heavy; but an art or handicraft may 
thus be acquired which may afterwards be exercised with 
great profit. We suppose that the art is one for which the 
individual or the nation is sufficiently qualified by nature, so 
that merely the tact and dexterity, which can only be 
acquired by practice, are wanting. The common answer to 
this question, 'Hhat when the proper time has arrived, and 
sufficient capital has been accumulated, manufactures will 
introduce themselves without the aid of protective duties," 



176 INTERNATIONAL EXCHANGES. 

is evasive and insufficient. It supposes that want of capital 
is the only • obstacle to the immediate commencement of 
manufacturing enterprises; whereas skill is also requisite. 
Capital, we admit, may be accumulated in agriculture and 
other pursuits; but skill can be acquired only by actual 
experiments in manufacture, and those experiments can be 
tried only at considerable sacrifice. Individuals cannot be 
expected to make these sacrifices, when the results of the 
experiment, if successful, will not accrue to their exclusive 
advantage, but will be open to' all. 

Even in Great Britain, these principles are carried into 
practical application, through the encouragement afforded to 
authors and inventors, by securing to them, for a limited 
period, the exclusive right to sell their respective writings 
and discoveries. Patents and copyrights, which no one 
thinks it improper to grant, are signal instances of the suc- 
cessful application of the principles of the protective system. 
They are strict monopolies, no one but the author or inventor 
and his agents being allowed to manufacture or sell the par- 
ticular book or machine which is thus protected. Conse- 
quently they are prohibitive rather than protective duties; 
any price can be set upon the articles which the owner of 
the patent or copyright sees fit to demand. And the public 
cheerfully pay the addition thus made to the natural cost of 
the commodity, knowing that without such encouragement 
few good books would be written and few useful machines 
invented; and that at the expiration r of a limited time the 
right to make and vend the work will become general, and 
the community will then be the richer by the whole value of 
the original proprietor's genius and labor. 

The reasonableness of granting patent rights and copy- 
rights is frankly admitted by an able advocate of free trade, 
Mr. J. S. Mill. This, he says, is not making the commodity 
dear for the benefit of the patentee, but merely postponing a 
part of the increased cheapness which the public owe to the 



INTERNATIONAL EXCHANGES. 177 

inventor, in order to compensate and reward him. for the ser- 
vice. Having conceded thus much, he finds himself obliged, 
by consistency of reasoning, to make the following additional 
admission, wliich really covers the whole ground usually claimed 
by the advocates of a protective system in the United States. 
"The only case," he says, "in which on mere principles of 
Political Economy, protecting duties can be defensible, is 
when they are imposed temporarily (especially in a young 
and rising nation) in hopes of naturalizing a foreign indus- 
try in itself perfectly suitable to the circumstances of the 
country. The superiority of one country over another in a 
branch of production often arises only from having begun it 
sooner. There may be no inherent advantage on one part, or 
disadvantage on the other, but only a present superiority of 
acquired skill and experience. A country which has this 
skill and experience yet to acquire may in other respects be 
better adapted to the production than those which were 
earlier in the field; and besides, it is a just remark that 
nothing has a greater tendency to promote improvements in 
any branch of production than its trial under a new set of 
conditions. But it cannot be expected that individuals 
should, at their own risk, or rather to their certain loss, 
introduce a new manufacture and bear the burden of carry- 
ing it on until the producers have been educated up the level 
of those with whom the processes are traditional. A pro- 
tecting duty, continued for a reasonable time, will sometimes 
be the least inconvenient mode in which the nation can tax 
itself for the support of such an experiment." 

But on this great question between free trade and a pro- 
tective policy, these arguments relating only to pecuniary 
loss or gain are not so weighty as the considerations, previ- 
ously adduced, respecting the devotion of the greater part 
of the people to skilled or rude labor, and their consequent 
collection in towns and cities, or wide dispersion over the 
face of the country. Viewed in this light, I confess the 
8* 



178 INTERNATIONAL EXCHANGES. 

question seems to be one between progress in civilization and 
the arts, or a gradual return, I will not say to barbarism, but 
to that very imperfect stage of civilization which exists in all 
countries where the population are almost exclusively devoted 
to agriculture. The best legislative policy is that which will 
most effectually develop all the natural advantages of a 
country, whether mental or material. It is as wasteful, to 
say the least, to allow mechanical skiU and inventive genius 
to remain unemployed as it would be to permit water-power 
to run without turning mills, or mineral wealth to continue 
in the ore, or forests, to wave where cotton and grain might 
grow luxuriantly. If the rude labor of husbandry is to 
form the principal employment of the people, the higher 
remuneration of skilled labor in the arts must be sacrificed; 
and this would be as bad economy as to turn our richest 
soils into sheep-pastures, or to feed cattle upon the finest 
wheat. The dispersion of the inhabitants over vast tracts of 
territory in the isolated pursuits of agriculture, the great 
majority of them being doomed to work which would not 
tax the mental resources of a Feejee-Islander, must be fatal 
not only to the growth of wealth, but to many of the higher 
interests of humanity. The hardships and privations of a 
life in the backwoods are a fearful drawback upon that 
bounty which confers, as a free gift, a homestead farm with 
a soil that reproduces the seed a hundred-fold. To give fuU 
scope to all the varieties of taste, genius, and temperament; 
to foster inventive talent; to afford adequate encouragement 
to aU the arts, whether mechanical or those which are usually 
distinguished as the fine arts; to concentrate the people, or 
to bring as large a portion of them as possible within the 
sphere of the humanizing influences, and larger means of 
mental culture and social improvement, which can be found- 
only in cities and large towns, — these are objects which 
deserve at least as much attention as the inquiry where we 
can purchase calicoes cheapest, or how great pecuniary sacri- 



INTERNATIONAL EXCHANGES. 179 

fice must be made before we can manufacture railroad iron 
for ourselves. I see not how these ends can be obtained in 
a country like ours, which is, so to speak, cursed with great 
advantages for agriculture, emigration, and the segregation 
of the people from each other, without throwing over our 
manufacturing mdustry, at least for haK a century longer, 
the broad shield of an effective protecting tariff. "When we 
have enjoyed, as England has already enjoyed, the benefit of 
a strict protective policy for over a century, for the purpose 
of completing our education in manufactures, then we shall 
be ready to do what England at last has done, — to throw 
down all barriers, and to invite the world to compete with 
us in the application of industry and skill to any enterprise 
designed to satisfy the wants of man. 



CHAPTEK XI. 

FREE TRADE. 
By Richard Cobden, M. P. 



Aylesbury, January 9, 1853. 

IT gives me particular pleasure to follow a gentleman who 
lias addressed you in the capacity of a tenant-farmer, one 
who, to my knowledge, in his own business, by the growth 
of more corn, and raising more cattle, and employing more 
labor to a given area of soil, excels most of his neighbors — 
a man so well entitled to speak to you on the subject of the 
interests of the agriculturists of this country. We are met 
here under the denomination of a reform meeting — a parlia- 
mentary and financial reform meeting ; but it will be known 
to every one present that the general impression, both here 
and abroad, is, that this is a meeting for the purpose, so far 
as I am concerned in the matter, of discussing the question 
of protection or free trade, especially with reference to 
tenant-farmers' interests in this matter. I remember speak- 
ing to an audience in this hall six years ago, and on that 
occasion going through the arguments necessary to show 
that the corn law was founded upon impolicy and injustice ; 
I remember on that occasion maintaining the proposition 
that the corn law had not proved beneficial to any class of 
the community, and I ventured to say that the country would 
be more prosperous without the system of agricultural pro- 
tection than it had been with it. Well, I am here now to 
maintain that by every test which can proclaim the prosperity 

(180) 



FREE TRADE. 181 



or adversity of a nation, we stand better now without ttie 
corn law than we did when we had it. [Cheers, and some 
cries of '' No."] I am rather glad to see that there are some 
dissentients from that proposition ; our opponents will not 
say that this is a packed meeting. We have got some pro- 
tectionists here. And now, if you will only just keep that 
order which is necessary for any rational proceedings, I will 
endeavor to make you free traders before you leave. 

I have said that, by every test which can decide the 
question of national prosperity or national adversity, we 
stand in a better position than we did when we had the 
corn law. What are the tests of a nation's prosperity ? A 
dechning or an improving revenue is one test. Well, our 
revenue is better than it was under a corn law. Our exports 
and our imports are better than they were under the corn 
law. Take the question of pauperism. I will not shrink 
even from the test of pauperism in the agricultural districts; 
I have the statistics of many of your unions in Buckingham- 
shire and Bedfordshire, and I warn the protectionist orators, 
who are going about persuading themselves that they have 
a case in the matter of pauperism, that when Parliament 
meets, and Mr. Baines is enabled to bring forward the poor- 
law statistics up to the last week (not going to the "blue 
books," and bringing forward the accounts of the previous 
year), I warn the protectionists that, with regard to the test 
of pauperism, even in the agricultural districts, it will be 
seen that things are more favorable now, with bread at a 
moderate price, than they were in 1847, when prices were 
to their hearts' content, and the loaf was nearly double the 
price it is now. Take the state of wages ; that is a test of 
the condition of the people. What are the people earning 
now, compared with 1847, when the protectionists were so 
well satisfied with their high prices ? Why, as a rule, 
throughout the country, there is more money earned now 
than there was then ; and they are getting the comforts and 



182 FREE TRADE. 



necessaries of life in many cases at two-thirds, and in some 
cases at less than that, of the prices of 1847. [A voice : 
" It is not so with the agricultural laborers."] I will come to 
them by-and-by. What I want you to agree with in the 
outset is that your laborers are not the nation ; and if your 
agriculture be an exception to the rule, we must find out 
the reason why it is so ; we will come to that by-and-by. 

I remember quite well, when I came here to see you 
before, how my ears used to be dinned by the argument that 
if we had free trade in corn, the gold would all be drained 
out of this country, for that you could not bring in 5,000,000 
quarters of grain without being drained of your gold ; that 
the foreigner would not take anything else in exchange. 
Why, we have had between 30,000,000 and 40,000,000 
quarters within these last four years, and the bank of Eng- 
land was never so encumbered with gold as it is now. I have 
spoken of wages, and I say that in every branch of industry 
the rate of wages has improved. You may say that agricul- 
ture is an exception. We will come to that, but I do not 
make an exception in favor of any trade in your district ; I 
do not make an exception in the case of the employment of 
women in your district, for I have made particular inquiry, 
and T find, even in the article of straw-plaiting, that families 
who could not earn 155. in 1847. are now earning 255. 
["No," and some confusion.] I say families. I know we 
have some of the most extensive manufacturers in this haU. 
Then there is the lace trade, the pillow-lace trade, employing 
a great number of women in Buckinghamshire. [Renewed 
confusion, owing to a gentleman pressing his way towards 
the platform. A voice : " He is a reporter."] Well, we are 
delighted to see the gentlemen of the press ; the more of 
them the better ; what we say here will be read elsewhere, 
and we speak for that purpose. I was about saying, that 
even the wages of the pillow-lace makers have advanced, 
and they are getting their bread at two-thirds the former 



FREE TRADE. 183 



price. Even the poor chair-makers of this and the adjoining 
county — a trade that has hardly known what it was to have 
a revival — are getting better. I repeat it, there is not an 
exception of any trade in which there is not an advantage 
gained by the moderate price of food that now prevails. 
['' Not the lace-makers ? "] They are getting more employ- 
ment. 

But I want now to come to the question which interests 
you in this immediate neighborhood. If every other great 
interest of the State is thriving — and no one can deny it — 
how is it that agriculture is depressed ? how is it that the 
interests of agriculture are found in antagonism with the 
interests of the rest of the community ? Why, these people 
have been proceeding upon a false system, they have been 
upon an unsound basis ; they have been reckoning upon Act 
of Parliament prices ; they have made their calculations 
upon Act of Parliament prices, and now they find they are 
obliged, like other individuals, to be content with natural 
prices. What is the reason that agriculture cannot thrive 
as well as other trades ? We find meetings called, purport- 
ing to be meetings of farmers,* complaining of distress ; and 
what is their /remedy for that distress ? Is it to go and talk 
like men of business to their landlords, and ask them for 
fresh terms of agreement, fresh arrangements, that they 
may have the raw material of their trade — the land — at the 
natural price, and free from those absurd restrictions that 
prevent their giving the natural value to it ? No. Go to a 
meeting where there is a landlord in the chair, or a land- 
agent — his better -half,— and you find them talking, but never 
as landlords and land-agents, but as farmers, and for farm- 
ers. And what do they say ? Why, they say, '' We must 
go to Parliament, and get an Act of Parliament to raise the 
price of corn, that you may be able to pay us your rents." 
That is what it amounts to. 

Now, what ought to be the plan pursued by the landlord 



184 FEEE TRADE. 



and tenant on an occasion like tliis? The landlord, as Mr. 
Disraeli very properly observed yesterday at Great Marlow, 
is an individual who has land, which is a raw material, and 
nothing more, to dispose of; and the farmer is a capitalist, 
who offers to take this raw material, in order that he may 
work it up and make a profit by it; in fact, the farmer and 
the landlord stand in precisely the same position that the 
cotton-spinner and the cotton -merchant stand in. The cot- 
ton-spinner buys his cotton wool from the cotton-merchant, 
in order that he may spin it up at a profit. If he can get 
his raw material cheap, he can make a profit; and if not, he 
cannot. But we never hear of the cotton- spinner and the 
merchant going together to Parliament for a law to keep up 
the price of cotton. I declare, when I find landlord and 
tenant running about raising a cry for "protection," and 
going to Parliament for a law to benefit them by raising 
the price of corn, I cannot help feeling humiliated at the 
spectacle, because it is a proof of want of intelligence on 
the one side, and, I fear, want of honesty, too, on the other. 
Now, suppose you were to see a crowd of people running 
up and down the streets of Aylesbury, shouting out,- ''Pro- 
tection! protection! oh, give us protection! we are all row- 
ing in the same boat! " and when you inquired who these 
people were, you were told they were the grocers of Ayles- 
bury and their customers, who were crying out for a law 
which would raise the price of all the hogsheads of sugar in 
the grocers' stores, — would you not say that this was a very 
curious combination of the grocers and their customers? 
Would not you say that the interest of the men who had 
the hogsheads of sugar to sell, and who wished therefore to 
raise the price, could not be identical with that of the men 
who had to buy the sugar? Yet, that is precisely the posi- 
tion in which the tenant farmers and the land owners stand. 
[Cries of "No, no," and "Yes."] Well, will any gentleman 
rise on this platform, and explain where I am wrong? Now, 



FREE TRADE. 185 



the plan I would recommend the tenant farmers and the 
land holders to pursue is precisely the plan which has been 
adopted by my own tenants and myself. I will explain how 
I acted in this matter. I promised I would explain my con- 
duct, and I will do so; and if those newspapers that write 
for protectionist farmers report nothing else of what I may 
say to-night, I beg them to let their farming readers know 
what I am now going to say. [A voice: "How large are 
your farms? "] I will tell you all about it. I happen to 
stand here in the quality of a landlord, filling, as 1 avowed 
to you at the beginning, a most insignificant situation in 
that character. 

I possess a small estate in West Sussex, of about 140 
acres in extent, and a considerable part of it in wood. It 
is situated in a purely farming district, in the midst of the 
largest protectionist proprietors in Sussex; the land is infe- 
rior; it has no advantages; it is nearly ten miles distant 
from a railroad; it has no chimneys or growing manufactur- 
ing towns to give it value. Now this is precisely the kind 
of land which we have been told again and again by Lord 
John Manners, the Marquis of Granby, and other protectionist 
landlords, cannot be cultivated at all with wheat at 40s., 
even if it were given to the cultivator rent free. This prop- 
erty came into my possession in 1847. [A Voice: "You 
got it from the League funds."] Yes; I am indebted for 
that estate, and I am proud here to acknowledge it, to the 
bounty of my countrymen. That estate was the scene of 
my birth and of my infancy; it was the property of my 
ancestors; it is by the munificence of my countrymen that 
this small estate, which had been alienated by my father 
from necessity, has again come into my hands, and that I 
am enabled to light up again the hearth of my fathers; and 
I say that there is no warrior duke who owns a vast domain 
by the vote of the imperial Parliament who holds his prop- 



186 FREE TRADE. 



erty by a more honorable title than that by which I possess 
mine. 

My first visit to this property, after it came into my 
possession, was in 1848. At that time, as you are aware, 
prices ranged high in this country; but never expecting 
those prices would continue, I thought that the proper time 
for every man having an interest in the land to prepare for 
the coming competition with the foreigner. I gave orders 
that every hedge-row tree upon my estate should be cut 
down and removed. I authorized the two occupying ten- 
ants upon the property to remove every fence upon the 
estate, or, if they liked, to grub up only a portion of them; 
but I distinctly said I would rather not see a hedge remain- 
ing on the property, inasmuch as it was surrounded with 
woods, and I did not think fences were necessary. That 
portion of the land which required draining, I had instantly 
drained at my own cost. The estate, as I have said, was 
situated in the midst of large protectionist land-owners, 
who, as a matter of course, were great game preservers; 
and it had therefore been particularly infested with hares 
and rabbits. I authorized the tenants on my land to kill 
the rabbits and hares, and to empower any one else they 
pleased to kill them. 

So troublesome had been the hares and rabbits on that 
little property, that they even entered the gardens and 
allotments of the laborers; and one of those laborers ap- 
peared before the Committee of the House of Commons on 
the Game-laws in 1845, and stated that the rabbits had not 
only devoured his vegetables, his cabbages, and his peas, but 
had actually dug up his potatoes? At that time — in 1845 — 
the property did not belong to me; but I took care to explain 
to this worthy man, in 1848, when I visited the estate, that 
if the hares or rabbits ever trouble him, or the other labor- 
ers living upon my property, that under the present law any 



FREE TRADE. 187 



man may destroy hares on Ms own holding without taking 
out a license, and I advised the laborers to set gins and 
snares upon their allotments and in their gardens, to catch 
all the hares and rabbits they could; and when they caught 
them, to be sure and put them in their own pots and eat 
them themselves. That is the way in which I dealt with the 
game on my property. I must confess that I have no taste 
whatever for the preservation of such vermin, which I 
believe to be utterly inconsistent with good farming, and 
the greatest obstacle to the employment of the laborers. 
For my own part I would rather see a good fat hog in every 
sty belonging to my laborers, than have the best game pre- 
serve in the country. 

That, then, was the course which I took in 1848, to pre- 
pare for the coming competition with the foreigner. It was 
a time when prices ranged high; nothing was settled about 
rents. In the course of the last year, however, I received a 
letter from one of my tenants, saying, "■ When I took this 
land from your predecessor, it was upon the calculation of 
wheat being at 565. a quarter; it is now little more than 
40s., and I should like to have a new arrangement made." 
I wrote in reply, " The proposition you make is reasonable. 
We will have a new bargain. I am willing to enter upon 
an arrangement, estimating the future price of wheat at 405. ; 
but whilst I am willing to take all the disadvantages of low 
prices, I must have the benefit of good cultivation, and 
therefore we will estimate the produce of the land to be 
such as could be grown by good farmers upon the same 
quality of soil." Now, from the moment that this reasona- 
ble proposition, was made, there was not the slightest anxiety 
of mind on the part of my tenants — not the least difficulty 
in carrying on their business of farming under a system of 
free trade as well as they had done under the system of pro- 
tection. From that moment the farmers on this small 



188 FREE TRADE. 



property felt themselves no longer interested in tlie matter 
of free trade and protection; and the laborers felt that they 
had as good a prospect of employment as they had before, 
and they had no interest in the question of protection. We 
settled our terms. I have bargained for my rent. It is no 
business of the public what rent I get. That is my business, 
and the business of the farmers; but if it is any satisfaction 
to my protectionist friends, I will admit that I am receiving 
a reduced rent, notwithstanding that I have drained the 
land, and given them the game, and removed the hedges, 
and cleared away every hedge -row tree. 

What, then, becomes of the argument that it is impossible 
to carry on agriculture in this country with wheat at 40s. a 
quarter ? I am getting some rent — and not so very large a 
reduction from the rent I got before; and it is enough for 
me to say that the land is being cultivated, and that farmers 
and laborers are employed and contented. 

Now, with regard to a lease, I said to both my tenants, 
'^ Either take the land from year to year, with an agreement 
binding each of us to submit to arbitration the valuation of 
unexhausted improvements when you leave the land; or, if 
you like, take a lease, and I will bind you down to no cove- 
nants as to the way in which you are to cultivate the land 
while you possess it." What possible excuse, then, can the 
land-owners in any part of the country have for coming for- 
ward and telling us that land cannot be cultivated because 
wheat is 405. a quarter ? The answer I intend to give to 
those noble dukes and lords who are running about the 
country, and who are so angry with me, and are scolding me 
so lustily, is this — '' Let me have the arranging of the affairs 
between you and your tenants, — the terms, the rent, and 
condition of the holdings, — and I will undertake to insure 
that your land shall be cultivated better than it was before, 
that farming shall be as profitable to the farmer, that the 



FREE TRADE. 189 



laborer sliall have as full employment, and at as good wages, 
provided you allow me to enter into the same arrangement 
that I have made with my own tenants." But that would 
not suit these parties. It would make a dry, dull, unprofita- 
ble matter of business of what is now made a piece of agita- 
tion, which ought to be called moonshine. 

Now, if I had been a protectionist, I might have made 
money by this. I will show you how 1 should have done so. 
When my tenants wrote to me to say there ought to be a 
fresh agreement between us, what would have been my 
answer had I been a protectionist ? I should have said, 
" That is true, my good friends ; we will have a meeting at 
Great Marlow or High Wycombe, and we will petition Par- 
liament to pass a law to protect you." Well, we should have 
had a meeting, my tenants would have been invited to attend, 
and would have shouted, '' We are rowing in the same boat! " 
and after two or three hours of dull speeches, you would have 
had a conclusion with " three groans for Cobden." After this 
meeting was over my tenants might have gone home, and 
might have been prepared, until the next audit, to pay their 
full rents as before. And if I were a protectionist landowner 
I should have then wanted some fresh excuse against the 
next audit-day. Consequently I should probably have told 
the farmers to Come to the next meeting, at 17 Old Bond- 
street, to memorialize her Majesty, — for they were not to be 
told to petition the House of Commons, but to lay their com- 
plaints at the foot of the throne. After my poor tenants 
had done all this and had gone home, and prepared their 
rents for the next audit-day, then some fresh excuse must 
be found, and we might have told the farmers that instead 
of mem^orializing the Queen they should agitate for a disso- 
lution of Parliament. In this case we should have been safe 
in respect to our rents for the next three years, because that 
is an agitation which would last such a period. 



190 FREE TRADE. 



In the mean time what would be the consequence to my 
tenants ? With heartsickening delay, and with the hopeless- 
ness inspired into their souls by these dreary, dull, protec- 
tionist speeches, telling them that they could not cultivate 
their land even if no rent were paid; and with the constant 
drain on their resources to pay their old rents, without 
amelioration in their holdings, one-half the tenants might be 
ruined, and I am not sure that a large proportion will not be 
ruined by the tactics of the protectionists at the present 
moment. But was it necessary for any farmer to be ruined 
if the landlords pursued the same system as myself ? This 
is simply and purely a rent question. And if the farmers 
cannot carry on their business, it is because they pay too 
high a rent in proportion to the amount of their produce. I 
do not say that in many cases the rents of the landlords 
might not be excessive, provided the land were cultivated to 
its full capacity. But that cannot be done without sufficient 
capital, and that sufficient capital cannot be applied without 
sufficient security, or without a tenant-right, or a lease 
amounting to tenant-right. "We want to bring the land- 
owner and the tenant together, to confront them in their 
separate capacity as buyers and sellers ; so that they might 
deal together as other men of business, and not allow them- 
selves to .play this comedy of farmers and landlords crying 
about for protection, and saying that they are rowing in the 
same boat; when, in fact, they are rowing in two boats, and 
in opposite directions. 

There is a new red-herring thrown across the scent of the 
farmers; they are told that protection cannot be had just 
now; but in the mean time they must have half the amount 
of the local rates thrown on the Consohdated Fund. I am 
really astonished that anybody should have the assurance to 
get up, and, facing a body of tenant-farmers, make such a 
proposal to them for the benefit of the landowners. The 



FREE TRADE. 191 



local rates at present are paid on ib.e real property of the 
country. Such is the nature of the poor-rates and of the 
county- rates, etc. They are not assessed on the tenant's cap- 
ital. [''Hear," and aery, "Mr. Lattimore said they are.'"] 
He said no such thing. [Some expressions of dissent.] He 
did not say that the assessment was on the ploughs and oxen 
of the tenantry. It is on the rent of land, and not on the 
floating capital ; for it is known to everybody that the assess- 
ment is on the rent, and, if the rate is assessed on the rent, 
why, the tenant charges it to the landlord when he takes his 
farm. He calculates what the rates and taxes are, and, if 
the farm is highly rated, he pays less rent. Did you ever 
know a landlord let his land tithe free on the same terms as 
land which had the tithe on it ? At present the rates were 
laid on the rent of land, and were ultimately paid by the 
landlord. I admit that at first the tenant pays it out of his 
pocket, but he gets it again when he pays his rent. But 
only think of this wise proposal of the farmers' friend, who 
says, " in order to relieve you tenant farmers, I will take 
one-half of these £12,000,000 of local taxes off, and put it on 
the Consolidated Fund — that is to say, on tea, sugar, coffee, 
tobacco, and other articles which you tenant-farmers and 
laborers consume." There is a pretty project for benefiting 
the tenant-farmers ! 

But there is another scheme; there are two ways of doing 
this. The other way is by assessing the rates on the floating 
capital of the country. The argument is — why should not 
J:he shop-keepers, the bankers, and the fundholders be 
assessed ? But if you allow the bringing in of stock-in-trade 
to be assessed, you must bring in the farmers' stock-in-trade 
to be assessed. I now ask the farmers in Aylesbury and its 
neighborhood what they would gain if the value of all stock 
held upon land within the neighborhood of Aylesbury were 
assessed ? Has not Mr. Lattimore told you that the estimated 



192 FREE TRADE. 



value of the farming stock of this kingdom is £250,000,000 ? 
then I can only say it is five times as much as the capital 
invested in the cotton trade, and more than that employed in 
the great staple manufactures together; and under such cir- 
cumstances, how can those landlords tell the farmers that 
they would put rates on the floating stock ? And is it not, 
then, a wise proposal to make to the farmers, to take off half 
of the rates, and to put the assessment on the floating capi- 
tal, of which the farmer possesses the greater proportion ? 
I am humiliated when I read of these meetings, m which tho 
farmers listen and gape at such speeches; and I feel a relief 
that it is not my duty to attend at such meetings, and that I 
have no landlord to oblige by being present at these 
meetings. 



CHAPTER XII. 

WEBSTER'S CHANGE OF VIEWS. 

SPEECH OF MR. WEBSTER OP MASSACHUSETTS, ON THE TARIFF, 
IN THE SENATE, JULY 25 AND 27, 1846. 



AND now, sir, w^th the leave of the Senate, I shall 
proceed to consider the effects of this bill upon some 
of those interests which have been regarded as protected 
interests. 

I shall not argue at length the question whether the gov- 
ernment has committed itself to maintain interests that 
have grown up under laws such as have been passed for 
thirty years back. I will not argue the question, whether, 
looking to the policy indicated by the laws of 1789, 1817, 
1824, 1828, 1832, and 1842, there has been ground for the 
industrious and enterprising people of the United States, 
engaged in home pursuits, to expect protection from the gov- 
ernment for internal industry. The question is, do these laws 
or do they not, from 1789, till the present time, constantly 
show and preserve a purpose, a policy, which might natur- 
ally and really induce men to invest property in manufactur- 
ing undertakings and commit themselves to these pursuits 
in hfe? Without lengthened arguments, I shall take this 
for granted. 

But, sir, before I proceed further with this part of the 

case, I will take notice of what appears to be some attempt, 

latterly, by the republication of opinions and expressions, 

arguments and speeches of mine, at an earlier and later 

9 (193^ 



194 Webster's change of views. 

period of life, to place me in a condition of inconsistency, 
on this subject of the protective policy of the country. Mr. 
President, if it be an inconsistency to hold an opinion upon 
a subject of public policy to-day, in one state of circum- 
stances, and to hold a different opinion upon the same 
subject of public policy to-morrow, in a different state of 
circumstances, if that be an inconsistency, I admit its 
applicability to myself. Nay, sir, I will go further, and 
in regard to questions which, from their nature, do not 
depend upon circumstances for their true and just solution, 
— I mean constitutional questions, — if it be an inconsis- 
tency to hold an opinion to-day, even upon such a question, 
and on that same question to hold a different opinion a 
quarter of a century afterwards, upon a more comprehen- 
sive view of the whole subject, with a more thorough 
investigation into the original purposes and objects of that 
Constitution, and especially with a more thorough exposi- 
tion of those objects and purposes by those who framed it, 
and have been entrusted to administer it, I should not 
shrink even from that imputation. I hope I know more of 
the Constitution of my country than I did when I was 
twenty years old. I hope I have contemplated its great 
objects more broadly. I hope I have read, with deeper 
interest, the sentiments of the great men who framed it. I 
hope 1 have studied with more care the condition of the 
country when the convention assembled to form it. And 
yet I do not know that I have much, sir, to retract or to change 
on these points.^ 

* Mr. Webster gave the following reasons in Boston why protection should be 
borne: 

"We see (said Mr. Webster) most enlightened nations, which have adopted this 
artificial system, are tired of it; we see the most distinguished men in England, 
for instance, of all parties, condemning it. The only difference of opinion is, 
whether the disease is not so inveternte as to yield to no remedy which would not 
produce greater evils. The only difference is. whether it be an evil grievous but 
to be borne, but a grievous evil not to h? borne. He alluded to England, because 
her example had been so often quoted as a model for our imitation. But why 
should we adopt, on her example, what she herself laments, and would be glad 
to be rid of?" 



Webster's change op views. 195 

But, sir, I am of the opinion of a very eminent person 
who had occasion, not long since, to speak of this topic in 
another place. Inconsistencies of opinions, arising from 
changes of circumstances, are often justifiable. But there 
is one sort of inconsistency which is culpable. It is the 
inconsistency between a man's convictions and his vote; 
between his conscience and his conduct. No man shall ever 
charge me with an inconsistency like that. And now, sir, 
allow me to say, that I am quite indifferent, or rather thank- 
ful, to these conductors of the public press who think they 
cannot do better than now and then to spread my poor 
opinions before the public. [A laugh.] 

I have said many times, and it is true, that up to the year 
1824, the people of that part of the country to which I 
belong, being addicted, to commerce, having been successful 
in commerce, their capital being very much engaged in com- 
merce, were adverse to entering upon a system of manufac- 
turing operations. Every member in Congress from the 
State of Massachusetts, with the exception of one, I think, 
voted against the act of 1824. But what were we to do? 
Were we not bound, after '17 and '24, to consider that the 
policy of the country was settled, had become settled, as a 
policy, to protect the domestic industry of the country by 
solemn laws? The leading speech which ushered in the act 
of '24 was called a speech for an " American System." The 
bill was carried principally by the Middle States. Pennsyl- 
vania and New York w^ould have it so; and what were we 
to do? Were we to stand aloof from the occupations which 
others were pursuing around us? Were we to pick clean 
teeth on a constitutional doubt, which a majority in the 
councils of the nation had overruled? 'No, sir; we had no 
option. All that was left us was to fall in with the settled 
poKcy of the country; because if anything can ever settle 
the policy of the country, or if anything can ever settle the 
practical construction of the Constitution of the country, it 



196 Webster's change of views. 

must l3e these repeated decisions of Congress, and enactments 
of successive laws conformable to these decisions. New 
England, then, did fall in. She went into the manufactur- 
ing operations, not from original choice, but from the 
necessity or the circumstances in which the public councils 
had placed her. And for one, I resolved then, and have 
maintained that resolution ever since, that, having compelled 
the Eastern States to go into these operations for a hveli- 
hood, the country was bound to fulfill the Just expectations 
which it had inspired. 

I now come, Mr. President, to the last topic on which I 
propose to trespass on the patience of the Senate; it is the 
effect of the change proposed by this bill upon the general 
employment, labor, and industry of the country. And I 
would beg, sir, in this view, to ask the reading of a petition 
which has been lying on my table for some days, but which 
I have not had an opportunity to present. It is a very short 
petition from the mechanics and artisans of the city of 
Boston. [The Clerk then read the petition.] N"ow, sir, 
these petitioners remonstrate against this bill, not in behalf 
of corporations and great establishments, not in behalf of 
rich manufacturers, but in behalf of ''men who labor with 
their own hands," whose ''only capital is their labor," and 
" who depend on that labor for their support, and for any. 
thing they may be able to lay up." 

Mr. President, he who is the most large and liberal in the 
tone of his sentiments towards all the interests of all parts 
of the country; he who most honestly and firmly believes 
that these interests, though various, are consistent; that 
they all may well be protected, preserved, and fostered by a 
wise administration of law under the existing Constitution 
of the United States; and he who is the most expansive 
patriot, and wishes well and equally well, to every part of 
the country, even he must admit tliat, to a great extent, 
there is a marked division and difference between the plan- 



Webster's change of views. 197 

tation States of the South, and the masses in the agricul- 
tural and manufacturing States of the North. There is a 
difference growing out of early Constitutions, early laws 
and habits, and resulting in a different description of labor; 
and to some extent, with the most liberal sentiments and 
feelings, every man who is concerned in enacting laws with 
candor, justice, and intelligence, must pay a proper regard 
to that distinction. The truth is, that in one part of the 
country labor is a thing more unconnected with capital *than 
in the other. Labor, as an earning principle, or as an ele- 
ment of society working for itself, with its own hopes of 
gain, enjoyment, and competence, is a different thing from 
that labor which in the other part of the country attaches to 
capital, rises and falls with capital, and is in truth a part of 
capital. Now, sir, in considering the general effect of the 
change sought to be brought about, or likely to be brought 
about by this bill, upon the employment of men in this 
country, regard is properly to be paid to this difference 
which I have mentioned; yet it is at the same time true, 
that there are forms of labor, especially along the seacoast 
and along the rivers, in all the Southern States, which are 
to be affected by this bill as much as the labor of any por- 
tion of the Middle or Northern States. The artisan in every 
State has just the same interest — the same at the South as 
at the North. And this is at the foundation of all our laws, 
from 1789 downward, which have in view the protection of 
American labor. The first purpose, the first object was, 
the full protection of the labor of these artisans. That 
subject was gone over the other day by my friend from 
Maryland [Mr. Johnson], who presented to the considera- 
tion of the Senate the first memorial ever sent to Congress 
on the subject of protection. It was from the city of Balti- 
more, and it was in 1789. And from that day to this, 
Baltimore has been more earnest and steady in her attach- 
ment to a system of law, which she supposed gave encour- 



198 Webster's change of views. 

ment to her artisans, than almost any other city of the 
Union. I say she has been steady and earnest, sir. If 
she has ever faltered, for a moment, she will, in a moment, 
resume her attitude, and pursue her accustomed course. 

Now, sir, taking the mass of men as they exist amongst 
us, what is it that constitutes their prosperity ? Throughout 
the country, perhaps more especially at the North, from 
early laws and habits, there is a distribution of all the prop- 
erty accumulated in one generation, among the whole suc- 
cession of sons and daughters in the next. Property is 
everywhere distributed as fast as it is accmnulated, and not 
in more than one case out of a hundred is there any accu- 
mulation beyond the earnings of one or two generations. 
The consequence of this is, a great division of property into 
small parcels, and a considerable equality in the condition 
of a great portion of the people ; and the next consequence 
IS, that out of the whole mass, there is a very small propor- 
tion, hardly worthy of being named, that does not pursue 
some active business for a living. Who is there that lives 
on his income ? How many, out of millions of prosperous 
people between this place and the British Provinces, and 
throughout the North and West, are there, who live without 
being engaged in active business ? None ; the number is 
not worth naming. This is, therefore, a country of labor. 
I do not mean manual labor entirely. There is a great deal 
of that, but I mean some sort of employment that requires 
personal attention, either of oversight or manual perform- 
ance, some form of active business. This is the character 
of our people, and that is the condition of our people. Our 
destiny is labor. Now, what is the first great cause of pros- 
perity with such a people ? Simply, employment. Why, 
we have cheap food and cheap clothing, and there is no sort 
of doubt that these things are very desirable to all persons 
of moderate circumstances, and laborers. But they are not 
the first requisites. The first requisite is that which enables 



Webster's change of views. 199 

men to buy food and clothing, cheap or dear. And if I 
were to illustrate my opinions on this subject, by example, 
I should take, of all the instances in the world, the present 
condition of Ireland. 

I am not about to prescribe, Mr. President, forms of 
legislation for Ireland, or principles to the Parliament of 
Great Britain for the government of Ireland. I am not 
about to suggest any remedy for the bad state of things 
which exists in that country ; but what that state of things 
is, and what has produced it, is just as plain and visible to 
my view as a turnpike road ; and I confess that I am aston- 
ished, that learned and intelligent men, who seem to have 
been brought up under certain notions, or systems, which 
appear to have turned their eyes from the true view of the 
case, have been unable to solve the Irish problem. "Well, 
now, what is it ? Ireland is an over-peopled country, it is 
said." It has eight and a half millions of people on an 
area of thirty-one thousand eight hundred square miles. It 
is, then, a very dense population; perhaps a thicker popula- 
tion, upon the whole, than England. But why are the 
people of Ireland not prosperous, contented, and happy? We 
hear of a potato panic, and a population in Ireland distressed 
by the high price of potatoes. "Why, sir, the price of potatoes 
in this city is three times the price of potatoes in Dublin; and 
at this moment potatoes are twice as dear throughout the 
United States as throughout Ireland. There are potatoes 
enough, or food of other kinds, but the people are not able 
to buy it. And why? That is the stringent question. "Why 
cannot the people of Ireland buy potatoes or other food ? 
The answer to this question solves the Irish case ; and that 
answer is simply this : The people have not employment. 
They cannot obtain wages. They cannot earn money. The 
sum of their social misery lies in these few words. There 
is no adequate demand for labor. One-haK, or less than 
one-half, of all the strong and healthy laborers of Ireland 



200 Webster's change of views. 

are quite enough to fulfill all demand, and occupy all employ- 
ments. Does not this admitted fact explain the whole case ? 
If but half the laborers are employed, or the whole employed 
but half the time, or in whatever form of division it be 
stated ; if the result is, that there is, in so thickly a peopled 
country, only half enough of employment for labor and. 
industry, who need to be surprised to find poverty and want 
the consequence ? And who can be surprised, then, that 
other evils, not less to be lamented, should also be found, to 
exist among a people of warm temperament, and social habits 
and tendencies ? It would, be strange, if all these results 
should not happen. 

But, then, this only advances the inquiry to the real 
question — Why are the laboring people of Ireland so desti- 
tute of useful and profitable employment ? This is a question 
of the deepest interest to those who are charged with the 
duty of remedying the evil, if it can be remedied. But it 
is rather beside any present purpose of mine. It may be 
said, in general, that Ireland has been unfortunate, as well 
as badly governed. In the course of two centuries, much 
the greater part of the soil of Ireland, generally supposed 
as much as nine-tenths, has been forfeited to the crown, and 
by the crown given or sold to persons in England, the heads 
of opulent families or others. These new English proprietors 
are \nown as absentee landlords. They own a vast portion 
of the island. The absentee landlord is not a man who has 
grown up in Ireland, and has gone over to England to spend 
his income. He may be a man who never saw Ireland in 
his life. I have heard of families, no member of which has 
visited its Irish estates for half a century, the lands being 
all the time under "rack-rent," in the hands of ''middle- 
men," and all pressing the peasantry and labor to the dust. 

There is a strange idea, at least it seems strange to me, 
which most respectable men entertain on this subject of 
Ireland. Mr. McCulloch, so highly distinguished an authori- 



/ 
Webster's change op views. 201 



ty, for example, will insist upon it, that there is no evil in 
Irish absenteeism, because he proceeds on the theory which, 
he says, admits of no exception — that it is best for a man to 
buy where he can buy cheapest. "Well, that is undoubtedly 
so, if he have the means of buying. Now, if Irish 
absenteeism did not diminish the employment of the people 
of Ireland, and so diminish their means of buying, the 
argument would hold. But who does not see, that if the 
landlord lived in Ireland, consuming for his family and 
retainers the products of Ireland, it would augment the 
employment of Ireland ? It seems clear to me that resi- 
dence would not only give general countenance and encour- 
agement to the laboring classes, and benefit both landlord 
and tenant, by dispensing with the services of middle-men, 
but that it would also do positive good, by producing new 
demands for labor. From early times the English govern. 
ment has discouraged in Ireland every sort of manufacture, 
except the linen manufactured in the north. It has, on the 
other hand, encouraged agriculture. It has given bounties 
on wheat exported. The consequence has come to be this, 
that the surface of Ireland is cut up into so many tenements 
and holdings, that every man's labor is confined to such a 
small quantity of land, that there is not half employment 
for labor, and the lands are cultivated miserably after all. 
Mr. McCulloch says that four-fifths of the labor of Ireland 
is laid out upon the land. There is no other source of 
employment or occupation. This land being under a '< rack- 
rent," is frequently in little patches, sometimes of not more 
than a quarter of ah acre, merely to raise potatoes, the 
cheapest kind of food. This is the reason why labor is 
nothing, and can produce nothing but mere physical living, 
until the system shall be entirely changed. This constitutes 
the great difference between the state of things in Europe 
and America. In Europe, the question is, how men can 
live. With us, the question is, how well they can live. 



^02 webstee's change of views. 

Can they live on wholesome food, in commodious and com- 
fortable dwellings ? Can they be well clothed, and be able 
to educate their children ? Such questions do not arise to 
the political economists of Europe. When reasoning on 
such cases as that of Ireland, the question with them is, how 
physical being can be kept from death. That is all. 

FREE TRADE ENCOURAGES DOMESTIC LABOR. 

I will now proceed, sir, to state some objections of a more 
general nature to the course of Mr. Speaker's observations. 
He seems to me to argue the question as if all domestic 
industry were confined to the production of manufactured 
articles; as if the employment of our own capital and our 
own labor in the occupations of commerce and navigation 
were not as emphatically domestic industry as any other 
occupation. Some other gentlemen, in the course of the 
debate, have spoken of the price paid for every foreign 
manufactured article as so much given for the encourage- 
ment of foreign labor, to the prejudice of our own, but is 
not every such article the product of our own labor as truly 
as if we had manufactured it ourselves? Our labor has 
earned it, and paid the price for it. It is so much added to 
the stock of national wealth. If the commodity were 
dollars, nobody would doubt the truth of this remark, and 
it is precisely as correct in its apphcation to any other com- 
modity as to silver. One man makes a yard of cloth at 
home ; another raises agricultural products and buys a yard 
of imported cloth. Both these are equally the earnings of 
domestic industry, and the only questions tliat arise in the 
case are two: the first is, which is the best mode, under aU 
the circumstances, of obtaining the article; the second is, 
how far this question is proper to be decided by government, 
and how far it is proper to be left to individual discretion. 
There is no foundation for the distinction which attributes 
to certain employments the peculiar appellation of American 
industry; and it is, in my judgment, extremely unwise to 
attempt such discriminations. 



CHAPTER XIIL 

DOES PROTECTION PROTECT?* 
Thomas G. Shearman, Esq. 



I. WHAT IS PROTECTION? 

^^ "PROTECTION to American industry" is a high- 
JL sounding phrase. If by it is meant that kind of 
protection which a good government gives against theft, 
violence, and fraud, then we all want to be protected our- 
selves, and to have the same protection extended to every- 
body. This idea makes the name of "protection" captivat- 
ing, and has given to the protective system all the popularity 
which it has. But the protection extended to American 
industry is not at all of that kind. It is a system of legisla- 
tion intended to compel every one who lives in the United 
States to buy goods which are manufactured here at a higher 
price than he could buy them for outside of this country. 
Its aim is to prevent manufactured goods from ever being 
sold here at as low prices as they are sold in Europe. It 
protects, or rather tries to protect, American manufacturers 
from the necessity of making their goods as well as European 
goods are made, if they want to get the same price. This 
is called protection against foreign competition. 

II. WHAT ARE WE TO BE PROTECTED AGAINST? 

When we hear that we need protection, we naturally ask, 
against what? The answer usually is, "against foreign com- 

* Micliigan State Free Trade League, January 11, 1883. 



204 DOES PROTECTION PROTECT? 

petition," or, "against a flood of foreign goods," or, "against 
an adverse balance of trade," or, as Judge Kelley neatly puts 
it, "against all comers." 

These are all fine phrases; but they do not mean anything 
definite. You cannot take hold of them. No one proposes 
to shut out any foreign competition, except that which 
comes, from China; for all parties rejoice in the increasing 
arrival of foreign laborers to compete with our own; and 
Judge Kelley, who says he is "against all comers," is not, I 
believe, even against Chinese comers, while he certainly 
rejoices in the coming of the very English workmen whom 
he so much hates when^ they remain at their old home. 
Then, as to the flood of foreign goods, it is one of the lead- 
ing doctrines of the protectionists that protection makes us 
so rich that we shaU import more foreign goods with pro- 
tection than we should without it. So they cannot object to 
the goods. Indeed, no one, so far as I can learn, objects to 
receiving as many foreign goods as he can get, provided he 
'is not required to pay for them; and the Bessemer steel mills 
import more foreign materials than any equal number of 
-concerns in the land. 

As to the balance of trade, that can hardly be the ground 
of protection, since a protective tariff was maintained and 
made constantly heavier for twelve years, from 1861 to 1873, 
while with each year the "adverse balance of trade" grew 
more and more adverse to this country. 

Reduced to plain English, the dangers against which the 
protective system protects us are too much freedom, too 
little work and too much pay. 

Of course protectionists will be indignant at this plain 
way of stating the casej but see if they can unstate it. Is 
it not their desire to protect us against freedom of trade, 
against lack of work and against the flood of foreign goods? 
If protection is not designed to accomplish these purposes, 
what is it intended to do? Are not these the favorite 



DOES PROTECTION PROTECT? 20o 

phrases of protectionists themselves ? Let us consider each 
of these points: 

1. We are protected against freedom of trade. Is there 
any intrinsic advantage in that ? We are not allowed to use 
our own discretion as to where we shall buy or at what 
price. Congress interferes and forbids us to buy at the 
English shop or from the Irish farm. Ireland sent us 
potatoes all last year, and took our corn; but Congress made 
us pay a penalty of more than one-third of all the potatoes 
imported.; not because the money was needed for revenue, 
but for the express purpose of preventing us from buying 
good Irish potatoes, instead of rotten American ones. Eng- 
land and Germany were willing* to sell us good woolen 
blankets at the same price which home manufacturers 
charged us for stuff made of three-fourths cotton. We all 
wanted to buy from the foreign shop; but we were protected 
against the freedom of having woolen blankets, and were 
tucked under disease-breeding cotton ones. Leave out of 
view, for the present, the other items to the credit of pro- 
tection, and is there any merit in the system simply as an 
interference with freedom ? Is not freedom of selection, in 
trade as in everything else, a good thing ? 

2. We are protected against lack of work. Most people 
want wages more than work. But protectionists long ago 
discovered that this was a mistaken desire, and that it made 
no difference what men were paid for th-eir work, so long as 
plenty of work was provided. 

Tariffs unquestionably increase work, because they shut 
out some goods which we must have, and so compel our 
people to make them at home. Work is increased; but 
where is the extra pay to come from ? 

Horace Greeley believed so thoroughly that increase of 
work was a blefesing, that he spoke of the Chicago fire as 
not altogether an evil, because it made more work. True. 
Let us burn down Brooklyn, and there will be plenty of work 



206 DOES PROTECTION PROTECT? 

for US. Burn New York City and there will be more. 
Better still; burn out the whole country; and what a vast 
amount of work there will be! 

But where are the wages to come from ? 

Wages are paid out of what has already been saved. A 
large city represents so much accumulated savings. "When 
the city is destroyed, its inhabitants have the work of 
rebuilding it; but they have to do it with their own hands, 
on no wages, as people do after a great war, or they have to 
borrow the money from some other city, with which to pay 
wages ; and if they do that, there is just so much taken 
from the amount which that other city could have afforded 
to pay in wages for other work. Destruction of property 
increases work, but diminishes wages. 

Now, "Protection," just like a burned city, makes more 
work, but provides no more wages. 

People seem to think that, -if you can only make plenty 
of work, no matter how, more wages are sure to come. Are 
they? If work is all you want, I alone will find work for 
ten thousand men. There are more than 100,000 miles of 
roads in this country, which ought to be macadamized at 
once. There are thousands of farms, which the owners will 
allow to you to cultivate for their benefit. Go dig, young 
•man ! Do you ask for wages ? I will give you as much as a 
protective tariff gives — just none at all. 

If mere increase of work is wanted (and that is all which- 
protection can possibly give), break up^all labor-saving 
machines, all railroads and telegraphs; adopt Euskin's 
theory, and have all goods carried from place to place on 
the backs of men or mules, or by row-boats. That will give 
employment for all. But, lest you should not encourage 
domestic industry sufficiently by all this, have a standing 
army of a million men, so that the rest may have to work 
foj: their support. Then tie every man's right arm behind 
his back, and by one grand stroke you will have doubled 
the amount of labor for every man? 



DOES PROTECTION PROTECT? 207 

3. We are protected against too mucli pay. Foreigners 
offer us so much iron, steel, wool, clothing, and food, that 
we become frightened and cry: "Here comes a flood of 
foreign goods! Shut them out! " But this is only their 
way of paying for things, which they buy of us. We try, 
by means of a tariff, to prevent them from paying us as 
large a price for w^hat we have sold them as they are willing 
to pay. We want to force them into paying gold for all 
that they buy. Sometimes we succeed in making them pay 
a large share in gold. But, as we cannot eat it or wear it, 
or make any use of it, the only result is that we immediately 
pay it out for iron, steel, clothing, and sugar, only getting 
one-third less of all these thingSL. than we might have had 
for the same, price, if we would have taken them from the 
foreigners at frst. 

We are dreadfully afraid of an adverse balance of trade, 
that is, of our imports exceeding our exports in the value of 
each to us; and one of the chief objects of protection is to 
prevent this from coming to pass. 

But exports are what we pay to foreigners. 

Imports are what foreigners pay to us. 

If our imports were not worth more to us than our ex- 
ports, we should be doing a losing business. If we want 
nothing but a ''favorable balance of trade," as it is called, 
the short and sure way to get it is to load our ships with 
$500,000,000 worth of goods, send them out to sea, and 
sink them there. 

But you say that what you want is to prevent a '' drain of 
gold;" and you are afrafd that, if we take goods from for- 
eigners, they will make us pay for them in gold. Don't be 
frightened. They can't do it ; for the simple reason that we 
have not gold enough and cannot get it. If they wiU not 
accept pay in other things, they will not get paid at all. 
And even if we could pay them any large amount of gold, 
they would have no use for it, except to pay it out again for 



208 DOES PROTECTION PROTECT? 

sometliing more useful, whicli they would do at once ; and 
so, if we wanted it, it would find its way back to us very 
quickly. As a matter of fact we have never sent gold 
abroad to any large amount, except when we used paper 
money to such a degree that we had no use for the gold. 

Nobody wants to keep gold, unless he is a crazy miser. 
It is the very poorest kind of permanent investment. You 
cannot eat gold, or wear gold, or cultivate gold. You have 
to part with it, in order to make it of the slightest use. 
The man to whom you lend or pay it looks around anxiously 
for the first chance to get rid of it for something better. 
The whole Vanderbilt family do not own, at this moment, 
$2,000 in gold, nor $10,000 in any kind of money, coin or 
paper. The fifty greatest millionaires in America do not 
keep on hand as much as $500 each, in any kind of money. 

A few banks keep coin on hand; but it belongs to them; 
not to their depositors; and even the banks are anxious to 
get rid of four-fifths of their money. Indeed, a bank which, 
could not persuade its customers to take out much more 
than four-fifths of all the coin which they brought in, would 
promptly wind up business, because it could not pay ex- 
penses. 

All this is just as true of other nations as of our own — at 
least, of all civilized nations; and the only exception is in 
countries where the governments rob the people of their 
property so often, that the people have to hide their wealth, 
which they can best do in gold or silver. 

More than nine-tenths of all exports from this or any 
other country consist of merchandise, not coin. They always 
did and always will. Accounts must balance between 
nations as well as men. It is true that we send more goods 
to England than she sends to us; but she sends her goods, 
to the amount of the balance, to Brazil, the West Indies, 
China, etc., and they send us, in their productions, millions 
of dollars more than we send to them. You cannot sell 
witliout buying, and you cannot buy without selling. 



DOES PROTECTION PROTECT? 209 

III. HOW PROTECTION UNDERTAKES TO PROTECT. 

Not very long ago protection used to be carried on by 
absolutely prohibiting the importation of certain classes of 
foreign goods. But no one ventures to propose any such 
straightforward method in this country, except with regard to 
ships. Those are prohibited from coming under the Amer- 
ican flag on any terms ; and a pretty business has been made 
of our shipping by such protection, for it is protected to the 
point of death; and invitations to the funeral are already 
out. 

The only method of protecting American manufacturers, 
other than ships, consists of a protective tariff. What is 
that ? It is a law by which, under the pretense of collecting 
taxes for the support of the general government, those taxes 
are so levied that as little money as can possibly be con- 
trived shall go to the government, and as much as possible 
shall go into the pockets of a few private persons, for their 
own use. 

Now, if an act were passed, declaring this object on its 
face, as for example, thus:' "Be it enacted, that every person 
presuming to purchase iron m Europe, shall pay 50 per 
cent, of its value to D. J. Morrell, and every person buying 
steel rails in Europe shall pay 100 per cent, of their value to 
O. W. Potter of Illinois, for the encouragement of the said 
Morrell & Potter in their laudable industry," such an act 
would be at once held unconstitutional and void as mere 
robbery. You could not get even the present Congress, bad 
as it is, to pass any such statute as that. But when an act 
is passed which provides for the same amount of taxation, 
with a full knowledge that the effect of it will be, not to put 
"that sum of money into the government treasury, but to put 
it into the pockets of Mr. Morrell and Mr. Potter, and with 
the avowed intent of producing that result; then, not only 
is such a law held to be perfectly constitutional, but it is 
considered perfectly proper for Mr. Morrell to get a seat in 



210 DOES PKOTECTION PROTECT? 

Congress and vote, as he did for just such a bill, putting just 
so much money into his own personal pocket. 

Protection is a "blind pool." Few understand what a 
''blind pool" is; but it is a phrase well understood among 
speculators. John Smith, for example, having obtained the 
confidence of a large number of speculators, informs them 
that he has a scheme in his mind by which enormous profits 
can be made, but which requires the investment of a large 
amount of capital on terms of absolute secrecy. If (he 
says) he were to tell any human being what use he made of 
the money, not merely when he bought and when he sold, 
but even what he intended to buy and sell, rival speculators 
would put up the price of the subject of speculation to such 
a degree as would make it useless for him to attempt any- 
thing. A well-known gentleman in New York, about two 
years ago, proposed a blind pool of this kind to his friends; 
and in less than two days over $17,000,000 were subscribed, 
of which he accepted only $7,000,000, and used it for sev- 
eral months without giving one of the investors a hint as to 
where the money had gone or when it would come back. 
In the end, the transaction proved very profitable to all con- 
cerned. But, of course, this gentleman acted under many 
restraints. Not only was his high reputation a guarantee 
for the propriety of his action, but everybody knew that 
sooner or later he could be compelled to account for every 
dollar of the money by legal proceedings, and could, after a 
reasonable lapse of time, be required to show exactly what 
he had bought, and at what price, and when and at what 
price he had sold. 

Now, protection is a blind pool of this kind, with three 
important points of difference. 

1. You know nothing whatever of the character or rep- 
utation of the men to whom you entrust your money; in- 
deed, you do not even know their names. 

2. You not only have no legal right whatever, to enquire 



DOES PROTECTION PROTECT? 211 

what they have done with your money; but you have an 
absolute certainty that no such account will ever be given to 
you or to any one else. 

3. Even if the persons who took your money were ever 
so much inclined to give you an account of the profits made 
on the transaction, and to tell you what they have done with 
your money, they could not possibly do it. 

Protection consists in a heavy tax levied upon all the 
people of this country, in a proportion bearing ten times as 
heavily on the poor as on the rich, under an assurance that, 
in some mysterious way, a large profit will be made upon 
these taxes, which will be redistributed among us all in like 
proportions. We are assured that this heavy taxation is 
necessary to enable manufacturers to pay high wages to 
their workmen, that these workmen in their turn will pay 
good prices to the farmers and shop-keepers for what they 
eat, drink, and wear, and that thus we shall all make money 
by being taxed. 

Under this assurance, the manufacturers tax you as much 
as they like; they give to their workmen only just so much 
as they like; and the workmen pay to the farmers and shop- 
keepers no more than they can possibly help. Nobody 
knows exactly what manufacturers receive the benefit of 
these taxes; nobody knows precisely what profit they make 
out of them; nobody knows precisely what wages they pay 
their workmen; everybody knows that they do not pay 
their workmen a penny more than other employers pay, who 
get none of these taxes; and there is not in the whole land 
one human being who could, if he would, show you where 
one single penny of the benefit positively comes back from 
these heavy taxes to anybody except a few thousand manu- 
facturers. But, undoubtedly, these manufacturers are hon- 
orable men; their intentions are very good; and they 
assure you continually that their only motive for taxing you 
so heavily is to pay you larger profits in some mysterious 



212 DOES PROTECTION PROTECT? 

way, which they do not themselves understand, but which 
they are quite sure would be satisfactory to you, if you 
could only understand it. 

Now, let me put may hands in your pockets, as you let 
the protected manufacturers do. You give to them about 
one-quarter of all that you earn, on the strength of some- 
body's assurance that you will get it all back with a profit. 
This "somebody" you do not know. You never did see 
him, and you never will. You cannot give me the name of 
any one man who will make that assurance on his own 
responsibility. He gives you no security; indeed, he does 
not give you his personal promise. He simply tells you 
that "it must be so." Now, give to me another quarter of 
your earnings. I am no anonymous protectionist. I am 
not a newspaper article without signature, which is really all 
the guaranty that yoa have for the return of the quarter of 
your earnings which you now give up. Give me a quarter 
of your, earnings, and I will give you my written guaranty 
to use them for your advantage, charging for my services 
only half the commission that manufacturers do — say 3 per 
cent, a year. More than that: I will give bonds, signed by 
some of the wealthiest men in New York, in four times the 
amount of any money you put in my hands, to account for 
it and to invest it for your benefit, only reserving the right 
to use it in my own discretion. Why do you not rise up 
and accept this offer ? 

Perhaps you are not entirely satisfied with me. Well, I 
will procure you the same offer from almost any other person 
whom you may name. I will get a bank to do it for you. 
Why do you not accept this offer ? Because, of course, you 
all know that you would be fools if you did. You know 
very well that neither I nor any one else can possibly use 
your earnings to as much advantage for you as you can 
yourselves. Some surplus money you may be' willing to 
invest; but even then you prefer to lend it out at inter- 



DOES PROTECTION PROTECT? " 213 

est on good security. You would not let any one take 
your earnings for the mere purpose of speculation, with no 
other security than a promise that he would give you such 
part of the profits as he saw fit, in case of his success. Yet 
you allow one quarter of your earnings to be taken every 
year for the purpose of speculation, by men who give you' 
no security and not even a promise to divide their profits 
with you, and whose names you never know, and can never 
find out. Who says that faith is extinct in the Nineteenth 
Century ? 

IV. WHO PAYS FOE PEOTECTION ? 

Many persons are persuaded that protective duties are 
either not taxes at all or else are all paid by foreign 
producers. A western schoolboy declared that the $200,- 
000,000 levied by the tariff were all paid to us by England; 
and thousands of people, who ought be in school, believe 
the same thing. 

Let us look at this point. In 1881 the duty on the best 
plate glass was 112 per cent. Glass of this kind, selling in 
Belgium for $386,000, was imported here, and $437,000 
duty was paid upon it. It was then sold here for over 
$850,000. Wlio paid the duty? Did the Belgium manu- 
facturer ? If he did, then out of $386,000 which was all he 
got for the glass, he paid $437,000 to our government for 
the privilege of sending it here. In other words, he gave us 
his glass for nothing, when he could have sold it at home for 
$386,000; and he gave us $51,000 more for leave to do so! 
On several articles duties were paid over 200 per cent. On 
this theory the foreign producer gave us the goods for 
nothing, and paid us a bonus of double the value of the 
goods to take them off his hands I Let any one believe such 
nonsense who is silly enough to do so. 

But the duties on some things are so heavy that they are 
not imported at all. That is the case with the cheapest kind 
of woolen goods, used by the poor. The duty varies from 



214 DOES PROTECTION PROTECT? 



115 to 200 per cent.; and they do not come here. The 
American manufacturer charges 70 to 100 per cent, more 
than the Enghshman, and is secured against competition. 
Who pays that difference ? Not the Enghshman, because 
he does not send any such goods, but keeps them all at 
home. If the American poor man who wears the goods 
does not pay it no one pays it. But the American manufac- 
turer gets it from somebody. 

Nothing can be more absurd than such a theory. Occa- 
sionally, of course, a foreign manufacturer pays part of the 
duty, when he happens to send goods in a bad season and 
they sell at a loss. But no foreigner is so foolish as to send 
his goods constantly to be sold at a loss. After one or two 
losses, he keeps his goods at home for better times. The 
great bulk of the tariff tax is paid by our own people. 

It cannot be too often repeated that protective taxes are 
necessarily ten times more burdensome to the poor than to 
the rich. No man can pay taxes out of anything except 
what he saves out of his income after paying the cost of his 
living. If it costs, without taxes, $400 a year to support a 
family (and that is all that nine-tenths of the American fam- 
ilies have to live upon), then the man who earns $500 has 
$100 out of which to p*ay taxes, while he whose income is 
$50,000 has $49,500 for taxation. The present system of 
taxation takes, on an average, about $80 a year from each, 
if they live alike, but about $3,000 from the richer man if 
he spends $15,000 a year. Thus, from every $100 saved by 
the poor, taxation takes $80. From every $100 saved by 
the rich and luxurious it takes $8. From every $100 saved 
by the rich and stingy it takes only 16 cents. * 

V. WHO CAN BE PROTECTED BY PROTECTION? 

Every one can see that protection against foreign competi- 
tion can only protect those who are exposed to such competi- 
tion. No one can ever get any direct benefit from protection 



DOES PROTECTION PROTECT? 215 

who is engaged in making something which cannot possibly 
be made abroad, or doing something in America which can- 
not possibly be done outside of America. Thus, domestic 
servants cannot get any benefit from the system because our 
dinners cannot be cooked nor our houses cleaned by people 
who live in Europe. House builders cannot receive any 
benefit from protection because a three -story brick house, all 
complete, cannot be shipped from Europe, just yet. Store- 
keepers cannot be protected because we cannot buy our 
goods at retail from European shops. P^armers growing 
wheat, corn, and other grain cannot be protected because 
this country raises all the grain that it needs and has an 
immense surplus every year for export. A little grain 
comes from Canada, but only to those parts of the United 
States which are nearer to Canada than to the great grain- 
producing States. Railroad builders have nothing to gain 
from protection, because, although rails may be made in 
England, railroads cannot be made there for us. No one 
engaged in the business of interior transportation can be 
protected because nothing can be carried to and fro in our 
own country by people who do not live in this country. The 
great mass of manufacturers cannot be protected because 
their work could not possibly be done anywhere but right 
here. Professional men, such as ministers, teachers, doctors, 
lawyers, and the like, must be on the spot in order to render 
service; therefore protection can do them no good. Clerks 
and all salesmen and saleswomen, dressmakers, milliners and 
all persons who make things especially to order or to fit par- 
ticular persons, can derive no benefit from protection, because 
their work could not be done anywhere except here. Finally, 
all persons who are not directly engaged in the production 
of any particular article for sale, including nearly all women 
and children, can get no benefit from protection, because 
whatever work they do is of a kind which could not be done 
anywhere but at home. 



216 DOES PROTECTION PROTECT? 

Now, leaving out all these classes, there are not, among 
tlie 54,000,000 of people of the United States, as many as 
500,000 who can possibly derive any direct benefit from the 
taxation called ''protection." But even this number has to 
be largely reduced. For all the direct benefit of protection 
goes necessarily to the employers in a few branches of pro- 
duction, namely, the manufacture of metals, cotton, woolen, 
and silk goods, and some chemicals, and the growing of 
wool, sugar, rice, and hemp. To allow 50,000 employers as 
engaged in these branches of protection would be an exag- 
geration; for the census shows less than 10,000 manufactur- 
ing concerns under these heads; but still I am willing to 
concede that number. This is the outside number of persons 
who can possibly receive any direct benefit from protection. 

The whole benefit of protection consists in raising the 
price of some of these articles by preventing foreign goods 
of the same kind being imported in such quantities as to cut 
down the price and reduce the quantity which will be made 
in America. Now, of course, the whole profit made on this 
advance in price goes in the first instance into the pockets of 
the employers. When the goods are sold it is not the work- 
men who receive the price, but the employers. Thus the 
direct benefit of the tariff is confined exclusively to these few 
employers. I know it is said that their profits are and must 
be divided with the workmen by increasing their wages; but 
all that I call attention to now is the fact that, in the first 
instance, the whole profit of the tariff necessarily goes to the 
employers, and to them alone. 

VI. HOW PEOTECTION PROTECTS WAGES. 

We have now come in due order to the great point which 
protectionists make on behalf of their system. They are 
never weary of claiming that it increases wages. The 
American Protectionist of March 25, 1882, says: 

"Does Protection Protect Labor? — If it does not pro- 



DOES PROTECTION PROTECT ? 21T 

• 

tect labor it protects nothing. The only serious difficulty in 
the way of our manufacturers, in competing with their for- 
eign, rivals is, of coui'se, the price they are compelled to pay 
their workmen." 

Let us see, then, how far protection increases wages:, 
1. It has already been made clear, I trust, that the only 
way in which protection can increase wages is by giving to 
the manufacturers of a few classes of goods larger profits, 
out of which they can, if they choose, pay higher wages. 
But it is equally clear that there is no law or public senti- 
ment which comjjels them to do so. They pay no greater 
wages than they are obliged to do by general competition 
among employers. When the amount of protection is 
raised they do not increase wages because of that. In July, 
1882, the tax on imported socks aaad other knit goods was 
raised from 35 per cent, to 80 per cent. Not only did the 
manufacturers of these goods fail to increase wages, but 
within four months afterwards they held a conference for the 
purpose of cutting down the wages of their workmen. In 
1872 the protection on iron, wool, and cotton goods was 
reduced 10 per cent., and wages were raised. In 1875 the 
protection on these goods was raised 11 per cent., and wages 
were reduced that same year and for four years thereafter. 
Early in 1880 a strong attempt was made in Congress, with 
fair prospects of success, to reduce the duty on steel rails 
from $28 a ton to $10. While this was agitated the steel 
rail manufacturers paid their workmen higher wages than 
they had done for five years previously. They kept up these 
wages until a new Congress was elected which was known to 
contain a majority of protectionists, who would not allow 
the steel rail duty to be materially reduced. Just before 
that Congress assembled the steel-rail manufacturers gave 
notice to their men of a reduction of wages. About fifteen 
months afterwards another attempt was made to reduce the 
duty on steel rails, and as soon as that was defeated the 
10 



218 DOES PROTECTION PROTECT? 

mamifacturers gave notice of anotlier and a larger reduction 
of wages. On the other hand, in 18 7 9, all the tax on 
imported quinine was suddenly abolished. So far from 
reducing wages, the quinine manufacturers soon afterwards 
increased them, and largely increased their own production 
of quinine. These are facts ; and protectionists are never 
weary of telling you that an ounce of facts is worth a ton 
of theory. 

Take another class of facts, applicable to a wide range of 
manufacturers. The highest tari:ff taxes upon iron that were 
ever known in this country were levied from 1828 to 1840. 
During that period, as the manufacturers testified before a 
protectionist committee of Congress, they made no increase 
of wages whatever. Between 1840 and 1842 the duties on 
jron were reduced, with^o perceptible effect upon wages. In 
the middle of 1842 the duties were more than doubled, and 
remained high until December, 1846. Official inquiries 
being made in the autumn of 1845, not one manufacturer 
pretended that he had increased wages. In December, 1846, 
the duties were cut down about one-third, and so remained 
until July, 1857. The manufacturers during that period 
very largely increased wages in the iron trade as well as in 
every other. There never was before, and there never has 
been since, so rapid an advance in the wages of manufactur- 
ing workmen of all classes, estimated in gold value, as 
between 1846 and 1860; during which time the tariff taxes 
were lower than they have ever been at any other time since 
1812. 

2. The census of 1880 shows conclusively that the high- 
est wages are paid by those employers who are not, and can- 
not be, benefited by protection, and that the lowest wages 
are paid by the protected classes. The average annual wages 
of all the persons employed in manufactures were $346. 
The average wages of employes in the protected cotton man- 
ufacture were $244, in the protected woolen manufacture 



DOES PROTECTION PROTECT? 219 

$293, and in tlie protected silk manufacture $292; all being 
below the general average. On the other hand, the average 
is raised by the high wages paid in innumerable other 
branches of manufacture, all of which are oppressed and 
dragged down by the heavy taxes which the tariff lays upon 
their raw materials. 

Even in the iron manufacture, where women and children 
cannot be employed, and where, therefore, wages average 
higher, the census shows that the average wages of iron 
workers were only $1.25 a day, while the unprotected car- 
penters all over the country earned from $1.50 to $2.50, and 
even farm hands earned an average of nearly $1.50 per day. 

Thus the census returns (which, it must always be remem- 
bered, are made up from statements of the manufacturers 
themselves, whose interest it is to show a different state of 
facts) clearly establish that the more protection is given to 
any class, the less wages that class pays to its workmen. 

3. But it is constantly said that at any rate wages in this 
country are higher than in Engk.nd, and that this is due to 
protection. 

Now, nothing can be more clear than that protection never 
helped to make wages higher in this country than in Eng- 
land, because it is a fact, perfectly well established, that there 
was more difference between mechanics' wages in England 
and in this country hefore we had a protective tariff, than 
there is to-day. In a statement made to the tariff commis- 
sion by a strong protectionist, who manufactures the same 
goods both in Ireland and New Jersey, he admitted that, 
under our present stringent protective system, the wages of 
the workmen whom he employs in his American factory 
have been steadily going down, while the wages of the 
workmen whom he employs in his Irish factory have been 
steadily going up. 

4. While it is true, that wages generally are higher in 
this country than in England, it is not true, that they are 



220 DOES PROTECTION PROTECT? 

higher in all the protected industries. On the contrary, one 
of the results of the twenty-two years of steady protection, 
which the cotton and woolen manufacturers have had, has 
been that the employers have finally succeeded in cuttiDg 
down wages in this country below the rates paid in England. 
An official report on these manufactures, issued by the state 
department in October, 1882, states that the wages paid on 
an average in England, which compared with those paid in 
America, for the same number of hours' work, show the 
following result : 

WAGES PAID FOR 52 WEEKS OF 64 HOUES EACH. 

In England. In America. 

Cotton Manufactures, $286 $244 

Woolen " 294 293 

Thus it will be seen that already protection has attained 
its greatest triumph, and accomplished the purpose for 
which, in fact, it was intended, that of cutting down the 
wages of the American operative to a point lower than that 
of the Enghshman. But even these figures do not show all 
that has been accomplished. For they show the English 
wages in 1881, and the American wages in the spring of 
1880. Since that time American wages have been reduced, 
and English w^ages have been raised. 

An English expert, who examined the whole subject 
carefully in 1879, found that American workmen in cotton 
•mills did -about 25 per cent, more work than English work- 
men did for the same money. 

Surely protection has been an incalculable blessing to the 
poor working people in the cotton and woolen factories of 
New England ! 

Of course, it will be said in answer to all this : " Why do 
Enghsh workmen come to the cotton and woolen mills of 
this country, if they get lower wages here than at home ? " 
The answer is very simple. They do not come. The cotton 



DOES PROTECTION PROTECT? 221 

and woolen mills import Swedes, Irish, and Canadians ; but 
tlie English emigration stopped long ago ; and thousands of 
English workmen, who were attracted by the higher wages 
of ten years ago, have already gone back or gone into other 
work. 

5. But, as usual, the most conclusive answer to the whole 
claim made for protection on the wages question is to be 
lound in the statements of the protectionist organs. The- 
New York Industrial League, the largest protectionist organ- 
ization outside of Pennsylvania, employed Mr. Charles S. 
Hill, of the State Department, to prepare statistics and an 
address for the Tariff Commission. In this document, which 
was endorsed by the League, and triumphantly published by 
their organ, The American Protectionist, it is explicitly stated 
that the workmen employed by American manufacturers 
produce, on the average, 100 per cent, more than those 
employed by English manufacturers, man for man. It is 
not claimed, even in this paper, that American wages aver, 
age more than 50 per cent, higher than English wages, all 
'round ; and not only do the facts already stated show that 
there is no such difference, but even the report of that 
packed and bigoted protectionist body, the late Tariff Com- 
mission, admits that the difference between English and 
American wages in cotton, woolen, linen, and silk manufac- 
tures, is very small. No one can honestly claim that manu- 
facturing wages are, on the average, more than 25 per cent, 
higher here than in England. If then our workmen pro- 
duce, man for man, even 50 per cent, more than the English, 
is it not clear that wages are practically 25 per cent, cheaper 
here than in England ? 

There is no doubt tljat this conclusion, startling as it may 
seem, is entirely correct. This is a country of hard work. 
The average working hours of an English workman are 54 
to 56 a week. The average hours of American workmen 
are 64 to 69 a week. The same class of merchants that in 



222 DOES PROTECTION PROTECT? 

England attend at their offices on an average six or seven 
hours a day, with a half holiday on Saturdays, will be found 
at their offices in America every day, Saturdays included, 
for ten hours in the dull seasons and fifteen hours in the 
busy ones. All classes of business men here, whether 
employers or employed, work harder and faster than the 
same classes in England. The very same man who in Man- 
chester cannot be persuaded to run more than three looms 
at once, will manage five in Lowell ; and he who in Lanca- 
shire runs five looms, will run eight in Fall River. For this 
increase of 60 per cent, in their work they get, at the utmost, 
20 per cent, advance in their wages. It is a well-known fact 
that, a few years ago, bricklayers in Lancashire were for- 
bidden by their trades-unions to lay more than 1,000 brick 
per day, and that the same men came to New York and laid 
easily 3,000 brick per day. Their New York employers 
paid them double their old wages, and even then got their 
work practically 30 per cent, cheaper than the English 
employers. ' 

VII. HOW PROTECTION PROTECTS MANUFACTURERS. 

Protection does not even protect the manufacturers as a 
class. It cannot possibly protect more than a few. Most of 
the manufacturers know that it does nothing for them 
directly any more than for farmers, because it is not possible 
for as much as one-eighth of aU the manufactured goods 
that we use to be manufactured abroad. In 1880 it appears 
by the census that the total manufactures of this country 
amounted to about $5,400,000,000. All the manufactures 
that were imported from abroad in the same year did not 
exceed in value $300,000,000. So the home manufactures 
were eighteen time as large as the imported ones. If all 
tariffs were abolished the manufacturers of Europe could 
not possibly send us more than twice the amount which 
they now send; and all the rest of the goods that we want 



DOES PROTECTION PROTECT? 223 

would have to be made here just as they are now. Indeed 
the vast mass of manufactured goods could not be made 
anywhere else. Tariff or no tariff, our flour and other man- 
ufactures of agricultural produce would be made here, and 
so would our houses and furniture and most of our clothes 
and food. There are not factories enough in the world, 
outside of our own country, to make all the iron and steel 
or all the woolen and cotton goods that we need. And as 
not more than one-eighth of the manufactures needed by 
the country could ever be imported, it follows that seven- 
eighths of the manufactures cannot possibly be benefited by 
protection. 

But even as to the one-eighth of the manufacturers who 
think they are benefited by protection, they are almost 
always mistaken. They have to pay so many taxes upon 
the things which they use, that the higher prices which they 
obtain by reason of protection on things which they sell are 
generally of no profit to them. 

The iron manufacture affords one of the very best iUus^^ 
trations of this truth. It has had prosperous periods both 
under low tariffs and high tariffs ; and it has had some bad 
times under low tariffs ; but much worse times under the 
present high tariff. Now, whenever the present high tariff 
has succeeded in shutting out foreign iron, which is the 
very thing for which the tariff was created, the iron manu- 
facturers have been nearly ruined. And whenever the 
American iron manufacturers have been prosperous, the 
quantity of foreign iron that has been imported, in propor- 
tion to the whole amount used in the country, has been 
larger than it was in the days of low tariff. Thus* in 1860, 
the tariff tax on pig -and scrap iron was $2.50 to $3 per 
ton ; and the importation of foreign iron was only 8 per 
cent, of the amount made here. In 1880 the tariff tax was 
$7 and $8 ; and the amount imported from abroad was 33 
per cent, of the amount made here. Now, there were five 



224 DOES PROTECTION PROTECT? 

or six years, during which this high duty was maintained, 
in which the importation of foreign iron was cut down to 
almost nothing ; but during all those years the iron manu- 
facture was in a most depressed and miserable condition ; 
one-third of the furnaces being closed, and haK the work- 
men turned adrift without any wages at all. 

The manufacture of woolen goods affords another illus- 
tration. It has always been grievously injured by a heavy 
tax on wool. Woolen goods are '' protected" (that is, 
taxed), by a duty of 50 to 100 per cent.-; but wool is also 
taxed at about the same rate, and machinery used in the 
manufacture is taxed 45 per cent. Now, it is impossible to 
manufacture first-class real woolen goods withotit mixing in 
them more or less of foreign wool. American wools will 
answer for a limited class of purposes ; but for some other 
purposes they are, taken alone, of no good at all. The one 
great reason that has always been advanced for protecting 
our woolen manufactures is that we ought to keep out Eng» 
lish shoddy goods. The result of 'protection is that the 
woolen manufacturers of this country, being hindered by - 
protection from getting real wool, use more shoddy and. 
cotton in place of wool than any other manufacturers in 
the world. Eeal woolen goods are almost unknown here^ 
First-class cloth is not made here at all. For every pound 
of wool in American woolen goods, there is an average of 
three-quarters of a pound of cotton and shoddy. There is 
no fraud in the world greater than American cloth. This 
is shown by the census returns, made up by the manufac- 
turers themselves. 

The worsted manufacture was created in this country by 
the free trade tariff of 1857, which gave it cheap wool. It 
was killed by another tariff, increasing the duty on woolen 
goods, but increasing it on wool also. It was finally revived 
by still another tariff, which gave a special increase of duty 
on worsted goods. But the worsted manufacturers them- 



DOES PROTECTION PROTECT? 225 

selves admit that they could make just as much money 
without any tariff on their manufactures as they do now, if 
they could have free wool. Consequently, poor people all 
through the United States have to be content with two pairs 
of stockings, when they could just as well have three, in 
order to keep up a protection which does no good, even to 
the stocking manufacturers. 

The wool-growers and wool-manufacturers agreed, in 1867, 
upon a special tariff, which they framed as skillfully as they 
knew how, so as to enable them both to rob the rest of the 
country to their own advantage. This tariff raised the tax 
very greatly on both wool and woolens. The result was the 
immediate destruction of several branches of woolen manu- 
factures, which could not be carried out without Canadian 
and other foreign wools. This was followed by general 
depression of the woolen manufacture for six years, until 
1873, and then absolute ruin for the next six years, until 187&. 

"Were wool-growers any better off ? Immediately after 
the passage of this tariff' the price of American wool fell 
in the market, because it could not be used without foreign 
wool, and the farmers slaughtered their sheep by millions. 
There never were so many sheep or so much wool raised in 
this country, for fourteen years after the adoption of this 
high tariff, as there were in the year before. We have just 
now got back to the point in wool production from which 
we started in 1867. But more 'than tiiat, it is worth while 
to notice how we got back. The tariff of 1867 was passed 
entirely at the instance of wool-growers in States lying east 
of the Missouri and north of the Ohio river. There are not 
to-day half as many sheep nor half as much wool raised in 
those States as there ^ere before the tariff of 1867. Two- 
thirds of the sheep now raised in America are raised in 
Texas, New Mexico, Arizona, and California, which nobody 
thought or cared about in 1867 as sheep-raising districts, 
and the people of which did not then, and do not now, ask 



226 DOES PROTECTION PROTECT? 

for protection. Every single member of Congress, from 
the districts which raise two-thirds of all the American wool, 
would consent to-day to strike off the duties on both wool 
and woolens. But the people of New York, Vermont, and 
Ohio, who are raising but few sheep of comparatively trifling 
value, insist on maintaining this tax upon themselves and 
the whole country. 

A large manufacturer in New York lately sent me word 
that 1 was perfectly right in principle, but that his business 
would be ruined if protection were abolished. Knowing 
exactly what his business consisted of, I calculated the bene- 
fit which he derived from the tariff. Nearly everything 
that he uses in his business is taxed from thirty-five to 
forty-five per cent. Not a single thing which he produces 
is protected by a duty of niore than twenty-five per cent. 
Scarcely anything that he makes could ever be imported if 
the tariff were entirely abolished. He is, therefore, in fact 
about twenty per cent, worse off for ha^dng any tariff at 
all. This is a very .common case among manufacturers. 
The duty ^ their machinery is forty-five per cent. The 
articles which they produce with that machinery are often 
only protected by duties from twenty-five to thirty-five per 
cent. So with machinery itself; while the protective duty 
on the steel, of which machinery is made, is sixty per cent., 
the duty on machinery is only forty-five per cent. 

Protection that will really protect is only possible on con- 
dition of limiting it to a very few specified classes of manu- 
factures. Extended to everybody, it injures all and benefits 
none. But it is impossible, in a free country, to maintain a 
really protective tariff of this nature. So much jealousy 
would be excited by it, that it would soon break down. The 
consequence is, that all that we have, or ever can have, in 
the way of protection, consists of keeping up duties which 
counterbalance each other, with the result of establishing a 
wildly confused system, under which, by lucky chance of 



DOES PROTECTION PROTECT? 227 

skillful fraud, a few manufacturers, who can buy their way- 
through Congress, derive some profit at the expense of all 
the rest of the community, and especially of other manufac- 
turers, who help them to sustain a tariff under the delusion 
that they are themselves profiting by it. 

WOULD FREE TRADE DESTROY MANUFACTURING ? * 

The census of 1880 shows that the manufactures of the 
United States were worth, in that year, $5,370,000,000. 
Our entire importation of foreign manufactures, for the 
same year, although much larger than usual, amounted to 
the value of only $300,000,000. Even if we add fifty per 
cent, for duties and freights, that would only make the 
value of the foreign goods used here 450 millions, against 
5,400 millions of domestic goods; thus showing that only 
one-thirteenth of all the manufactures used here came from 
abroad. These came almost exclusively from England, 
France, Belgium, and Germany, and chiefly from England. 
Now, in average years, each of those countries exports to 
other countries more than ten times as much as it sends to 
the United States. For several years before 1880, they 
sent only one-fifteenth of their exports to us. In 1880, they 
sent about one-eighth; and this sudden increase raised prices 
with them so greatly that they could not supply half our 
demands. Their total exports of all things, to all countries, 
in 1880, amounted to only about 3,000 millions. If, there- 
fore, they had poured all the things which they produced 
upon us, abandoning commerce with all the rest of the 
world, they could not have supplied us with half the things 
that we need ; and where would prices have gone to under 
such circumstances ? * The whole idea is absurd. It would 
be impossible for all Europe to spare us 750 millions' worth 
of manufactured goods within the next twelve months if 
our whole tariff were abolished to-morrow. This would 

* By Thomas G. Shearman, Esq., of New York. Issued by Free Trade Club. 



228 DOES PROTECTION PROTECT? 

not be enough to supply the place of one-tentli of our manu- 
factures, because we now take 300 millions' worth from 
Europe, and yet need all the factories that we have. 

Again, we import scarcely anything from Europe in an 
entirely finished state. At least nine-tenths of all manu- 
factured articles that we take from Europe consist of goods 
to be made up by manufacturers here. European manu- 
facturers do not and cannot make our clothes, furniture, and 
other supplies for actual use, to any great extent. If our 
manufactures stopped, the importations would stop at once. 
European manufacturers sell almost exclusively to manu- 
facturers here, so far as they sell to America at all. Potfery 
is almost the only important exception to this rule; and that 
is only a trifling item. The official report for 1881 shows 
that less than $40,000,000 worth of goods ready for use 
were imported from Europe (including books, but not liquors 
and cigars), being, as already stated, less than one-seventh 
of the imported manufactures, and less than one-six- 
teenth of all the imports. It is therefore impossible that' 
free trade should shut up our manufacturing establish- 
ments, because those are practically the only customers for 
foreign manufacturers. 

And from this fact it will be seen what folly it is to 
"protect" our manufacturers by taxing the very things 
which they need as materials for manufacture. Materials 
cost sixty or seventy per cent, of the whole outlay of Amer- 
lean manufacturers. Manufacturers and mechanics import 
nine-tenths of all the foreign manufactures which come into 
the country, and yet think it necessary for their own protec- 
tion to make their own materials cost forty or fifty per cent, 
more than the English manufacturer pays for the same 
things. 

The truth is that the tariff, which is commonly supposed 
to be the mainstay of our manufacturing industries, is their 
greatest burden. It takes more money out of the pockets 



DOES PROTECTION PROTECT? 229 

of manufactiirers than of auy other class. Its ''fostering 
influence " strangles more manufacturing industries than it 
helps. Look at a few figures. In 1881, the total importa- 
tion of iron was valued at $33,000,000. Of this amount, 
only $75,000 consisted of goods which are described in the 
official list as fit for family use. $2,500 worth were used 
for ship supplies. Chains, to the value of $110,000, might 
possibly be used by farmers without further manufacture. 
Railroad bars and supplies amounted to the value of $4,- 
120,000. All the rest, so far as can be ascertained, consisted 
of articles used exclusively for manufacturing purposes, of 
the value of over $28,000,000. And, which is the most 
absurd feature of all, more than $24,000,000 of the whole 
$33,000,000 were used exclusively in the home manufacture 
of iron itself! Thus, out of the $12,000,000 taxes laid on 
imported iron, the iron manufacturers themselves paid 
about $9,000,000, showing that the tariff did them at least 
three times as much harm as good. And, reckoning the 
construction of railroads as a branch of manufacture, as it 
is, about ninety-nine per cent, of the whole tax on iron was 
taken from manufacturers of some sort. But, even exclud- 
ing railroad builders, eighty-five per cent, of the whole tax 
was paid by manufacturers. 

Take steel. It was imported in 1881 to the value of 
nearly $18,500,000, and paid $9,347,000 for duties. All 
the articles enumerated in the official list, which could be 
used for any other than manufacturing purposes, were 
cutlery, fire-arms, and skates, valued at $3,157,000, and 
paying a tax of $1,304,000. Thus seven -eighths of the 
taxes on steel fell upon constructive industry. 

Tin paid $4,195,0*00 in taxes, of which $4,148,000 were 
paid by tin manufacturers themselves. 

Wood paid $1,536,000, of which $1,145,000 fell upon 
wood manufacturers. 

Wool and woolen goods paid $27,235,000 taxes, of which 



230 DOES PROTECTION PROTECT? 

only $2,673,000 were paid on finislied goods, such as carpets, 
blankets, hosiery, and clothing, ready for actual use. Man- 
ufacturers, including tailors, paid about $24,612,000, or 
over nine-tenths of the whole tax. 

Taking these branches of manufacture together (and they 
are among the most clamorous for " protection "), we find 
that the total amount of duties imposed upon them for pro- 
tective purposes, in 1881, was $54,478,878, of which over 
$50,000,000 were paid by manufacturers themselves, includ- 
ing railroad builders, or nearly $43,300,000, excluding rail- 
road builders. Thus the figures prove the truth of our first 
statement, that nine-tenths of the burden of protection falls, 
in the first instance, upon manufacturers and mechanics. 

And yet we are constantly told that nothing but this sys- 
tem of taxation keeps these very manufacturers employed, 
and that, if we cease to heap taxes of forty, fifty, and one 
hundred per cent, upon the materials which they use in their 
shops, those shops will instantly close and the whole country 
go to ruin. Never was greater nonsense offered in the name 
of argument. 



CHAPTER XIV. 

THE NECESSARY FOUNDATIONS OF INDIVIDUAL 

AND NATIONAL WELL-BEING, AND 

OF CIVILIZATION. 

By Henry Carey Batrd.* 



PERMIT me to direct your attention this evening to the 
theme, The Necessary Foundations of Individual and 
National WeU-Being, and of Civilization. 

UNSETTLED CONDITION OF POLITICAL ECONOMY. 

To hear a certain school of political economists and their 
followers, here and in England, dogmatically lay down the 
law, and even insist that the case was closed, one would 
hardly imagine that their dogmatisms came within a depart- 
ment of knowledge in which nothing whatsoever was placed 
beyond dispute. But in pohtical economy not even the 
definition of a single important word — political economy 
itself, for instance — is settled. In 1844, De Quincey, a 
believer in Ricardo's Theory of Rent, one of the orthodox 
principles, said of political economy: '' Nothing can be postu- 
lated, nothing can be demonstrated, for anarchy even as to 
the earliest principles is predominant." 

Nothing is to be taken for granted. This fact cannot be 
too distinctly impressed upon your minds and memories. 
The professors are not even agreed as to whether it is a 

* Extract from Lecture delivered before the BrookljTi Revenue Reform Club, 
February 28, 1883. 

(231) 



232 NECESSARY FOUNDATIONS. 

science or an art, or a combination of both, or upon the 
proper and legitimate range of the subject. Therefore is it 
that they are ah initio morally debarred from the practice of 
dogmatism; and yet with all of these causes, impelling 
toward modesty, the average political economist is seemingly 
more confident in hi& opinions, and certainly more overbear- 
ing and arrogant in the expression of them, than any other 
manner of man to be found in any community. Among the 
believers in England in what arrogates to itself the name of 
free trade — ^merely free foreign trade — for instance, disbelief 
in this fetich, is regarded, ipso facto ^ as an evidence of such 
ignorance in the disbeliever, that it is considered as useless 
as it is hopeless to argue the question with him; and he is 
then and there put down with the expression of opinion that 
the argument is complete and the question decided, and that 
he is an ignoramus if he does not know and recognize these 
facts. It need hardly be urged that this is not the spirit in 
which to approach the investigation of truth. Indeed, the 
existence of this spirit is proof conclusive that these philoso- 
phers and their followers lack full faith in the truth of the 
doctrines which they would thus, without reason, force upon 
the acceptance of mankind. 

For myself, coming here as I do, a believer in and a 
representative of that noblest of all the sciences, the scientia 
scientiarum, the American, or, if you please, the Pennsylvania 
System of Social Science, founded by my late kinsman, 
Henry C. Carey, I have emphatically to say, that I come not 
as an apologist for protection, or for the science upon which 
it rests. I stand not on the defensive; but I assume the 
aggressive. This aggression shall strike at the very roots of 
the system of political economy, the ''dismal science" of 
Carlyle, or more properly of Robert Southey, upon which is 
built the huge and arrogant superstructure falsely denomi- 
nated free trade; and I shall do this at the outset of my 
discourse. 



NECESSARY FOUNDATIONS. 233 

THE PENNSYLVANIA SYSTEM OF SOCIAL SCIENCE. 

How is it with tlie Pennsylvania system ? Has it been 
content with theories based on assumptions, or has it 
examined facts and analyzed the movements of society, and 
from these developed laws? It has given us the true law of 
the occupation of the earth, and that of population, both 
based upon the observation of facts, the law of value, which 
latter is not found in the cost of an article, but in that of 
reproduction, value being a measure of the resistance to be 
overcome in getting possession of the thing desired. Thus, 
with all improvements in modes of production, existing 
things decline in value compared with man, labor becomes 
more efficient; and a larger proportion of a larger product 
goes to labor, whose lot thereby becomes in all advancing 
communities a steadily improving one. This law of dis- 
tribution is one which introduces both harmony and happi- 
ness into the future of the human race. 

ASSOCIATION. 

But the fundamental law of this system, the one which 
lies at the basis of all society, the most important condition 
governing man, still remains to be stated; and is so self- 
evident that its statement alone is necessary to carry con- 
viction as to its truth, and its far-reaching effects, to every 
candid, unbiased, and intelligent mind. <* Man, the molecule 
of society," says Carey, "is the subject of social science. 
Like all other animals, he requires food and sleep; but his 
greatest need is that of association with his fellow-men. 
Born the most helpless of animals, he requires the largest 
care in infancy. Capable of acquiring the highest degree of 
knowledge, he is yet destitute of the instinct of the bee, the 
beaver, and other animals. Dependent for all his knowledge 
on the experience of himself or others, he needs language 
for the interchange of thought; and there can be no lan- 
guage without association. Isolate him and he loses the 



234 NECESSARY FOUNDATIONS. 

power of speech, and with it the reasoning faculty; restore 
him to society, and with the return of speech he becomes 
again the reasoning man." 

Here is the pivotal point, the controlling law of man's 
existence, no one being sufficient unto himself; and the 
further he advances in culture and civilization the greater 
his dependence upon his fellow-men, this dependence being 
in fact at once a measure and a test of his civilization. In 
the early stages of society, and in isolated communities, there 
is but little societary life; and there man is dependent upon 
a comparatively few people; while in a city like London, 
Paris, New York, or Philadelphia, there are many thousands 
of individuals, each of whom daily calls for the services of 
millions of men. Indeed, there are few persons here present 
who do not do this — the purchaser of a copy of the Herald, 
Trihune, or Sun, thereby calling for the services of the 
millions of men who have in any way contributed to the 
production of one of these papers, even so remotely as by 
making the materials of which the railroads or telegraphs 
have been constructed — by means of which the raw materials 
and news have been conveyed — all the way through from 
the smelters of the metals, in the machinery used in its 
production, to the makers of the paper and the type, and to 
the compositors, pressmen, editors, etc. 

That there may be association there must be differences 
among those composing a community, and the greater these 
differences the more instant the demand for labor power, the 
most perishable of all commodities, which must be consumed 
on the instant of its production, or it is lost forever. The 
measure and test of the power and wealth of any community 
or country is found in the proportion of its labor power 
which is not wasted — ^more being wasted in every country 
than is utilized. 

"The more imperfect a being," says Goethe, "the more 
do its parts resemble each other, and the more do the parts 



NECESSARY FOUNDATIONS. 235 

resemble the whole. The more perfect a being, the more 
dissimilar are the parts. In the former case, the parts are 
more or less a repetition of the whole; in the latter they are 
totally unlike the whole. The more the parts resemble each 
other, the less is the subordination of one to the other, 
subordination of parts indicating a high grade of organiza- 
tion." '^Life being a mutual exchange of relations," says 
Carey, "where difference does not exist, exchanges cannot 
take place; and the development of individuality has ever 
been in the ratio of the power of man to combine with his 
fellow-men." 

THE NECESSITY FOR DIVERSIFIED INDUSTRIES. 

Just here and for these reasons, as may well be seen, 
comes in the imperative necessity for diversified industries, 
without which no country is now, nor has it ever been rich, 
because of its great waste of labor power, and in exact 
proportion to this diversification of industries is a country 
rich, powerful, and independent. Let us not be diverted 
from the contemplation of this great fact by the mere dis- 
cussion of prices, which only befogs the case — an article 
bought abroad being dear at any price, when the labor is 
being wasted at home, which could and would have produced 
it, had it not thus been bought. Thus is it that agriculture 
can only flourish where the plow^ the loom, and the anvil, 
work in harmony, the one with the others, Without con- 
sumers near the farm the productions of the latter must be 
limited to those few articles, such as wheat, corn, rye, cotton, 
tobacco, etc., which will bear transportation to a distance, 
and which are so exhausting to the soil, and made still more 
so by being consumed away from the farm; thus, while the 
farmer is being ground under the tax of transportation, 
there can be no proper rotation of crops, and the result to 
the soil in this country, and especially in the South, is such 
that the Hon. Chas. J. Faulkner of Virginia, felt constrained 
in 1858 to say: 



236 NECESSARY FOUNDATIONS. 

"During the past summer I heard an opinion expressed by Pro- 
fessor Henr}^ the distinguished Secretary of the Smithsonian 
Institute, which struck me at the moment as extravagant, but 
which a little reflection satisfied me was founded upon the strong 
probabilities of truth. It was that there was more wealth invested 
in our soil in fertilizing matter at the moment this continent was 
discovered by Columbus, than there is at present above the surface 
in improvements and all other investments. . . . The fertility- 
which ages had accumulated upon its surface has been the capital 
upon which the farmer has been drawing with reckless prodigality 
from the first settlement of the country." 

Only wittL a diversification of employments, and when the 
consumer is brought to the side of the producer, and the 
power of association thus becomes great, and wealth in- 
creases, is it that the richer soils are brought under cultiva- 
tion. When these industries decline, men are driven back 
from the richer to the poorer soils, as in India, Turkey, and 
Ireland ; and only in purely agricultural countries is it that 
famines take place. These really result not from an absence 
of food, but from want of the means of procuring it. In 
1847, during the famine in Ireland, from which one million 
of people perished, Ireland was still a large exporter of food 
to England. That unhappy country is kept in a chronic 
state of pauperism, anarchy, and barbarism because of an 
absence of diversified industries, and of the power of associ- 
ation, which can come from them alone. 

THE PAKT PLAYED BY GEE AT INDUSTEIES IN THE SOCIAL 

ECONOMY. 

Every important industry existing in a country becomes 
incorporated into, and a part of the very marrow and text- 
ure of the societary hfe of that country; acting like a prime 
mover, or rather like a great heart, giving and receiving at 
every moment, at every pulsation, new, invigorating and 
regenerating life and power. The animal organism has but 
one heart, but the societary one may be said to have as 



NECESSARY FOUNDATIONS. 237 

many as tliere are important industries in it; and as these 
industries increase in number, these great hearts also in- 
crease in number, and as they gain in vigor they impart this 
vigor to society, which is but another name for Association 
— to which these industries are as necessary as are the heart 
and the circulation of the blood to the animal organism. 

So great, so complicated, so far-reaching are the ramifica- 
tions of the effects of the pulsations of these great industrial 
hearts to society, that thoroughly and completely to analyze 
and follow up the ebb and flow from and to one of them, is 
beyond the power and capacity of the human mind. Per 
mit me, however, for a few moments to direct your attention, 
inadequately though it be, to some of these phenomena con- 
nected with a single industry in giving motion and life to 
society. I refer to the American Bessemer steel-rail manu- 
facture, at once the crown and glory, and the practical vindi- 
cation of the protective policy in the United States within 
the past decade and a half, and the true and unerring guide to 
national industrial legislation — Professors Perry and Sumner, 
and those great statesmen in Congress, Messrs. Beck, Carlisle, 
Tucker, and Morgan, to the contrary notwithstanding. 

The rail-roller in a Bessemer rail mill, who receives the 
steel in order to heat it and put it through the rolls, receives 
therefor wages which he expends for fuel, food, clothing, 
shelter, etc. This expenditure gives vitality to the business 
of the butcher, the baker, the miller, the dry-goods dealer, 
the coal dealer, etc., etc., and to the investment of the owner 
of real estate, and through these several persons to the 
farmer who raises cattle, sheep, wheat, rye, corn, vegetables, 
milk, butter, fruit, etc. ; to the coal operator and thence to 
his miners and laborers; the raisers of horses and mules, 
and the feed for these latter; to railroads and other carriers, 
thence to the manufacturers of cotton and woolen fabrics 
and their workmen, and the producers of raw cotton and 
wool; the importers of tea, coffee, and sugar, and the re- 



238 NECESSARY FOUNDATIONS. 

finers of tliis latter; and from all of these back and through 

' CD 

eacli other, in a ceaseless round of acts of association, the 
threads of the multitudinous ramifications of which it is as 
impossible to gather and trace as would be an attempt to 
count the sands on the sea-shore. 

Here I have merely attempted to indicate the direction in 
which we may look in order to analyze these movements, 
and nothing more; beginning and ending with the roller of 
rails, not attempting to go througli the same process with the 
owner of the Bessemer works; the men who have made the 
steel itself; the bricklayers, carpenters, iron and steel work- 
ers, laborers, etc., who have built these works; the lumber- 
men and brick-makers who have furnished materials; the 
manufacturers who have produced the pig iron, the miners 
and quarrymen who have furnished the iron, coal, and lime- 
stone; the transporters of all these materials, and countless 
others who have more or less labored with mind and body 
to start and keep in motion this great industry, and those 
others on which it has drawn, and the other millions of men, 
women, and children who have in one way or another minis- 
tered to their wants. 

THE ENTIRE COST OF SUCH RAILS 

as these is but a utilization of labor which would have gone 
to waste, or of raw materials which would have had no 
value but for this industry — coal, for instance, in the ground 
on an undeveloped tract not being worth one cent a ton. 
The commerce which is set in motion by such an industry is 
in the aggregate many times as large as its own volume, 
thereby assisting millions of men in the work of complying 
with the paramount and controlling condition of their 
nature, and upon which their prosperity, civilization, and 
happiness depend, — that of association, — exchanging com- 
modities, services, and ideas with their fellow-men. Trans- 
fer the present demand for this commodity to Great Britain, 



NECESSARY FOUNDATIONS. 239 



and to it also is transferred the power of association which 
accompanies it, involving thereby a dechne in the demand 
for American services, commodities, and ideas, and of 
pational wealth and power. 

This analysis, inadequate though it be, in showing the 
mde dissemination of the vitalizing influences which flow 
from a magnificent industry such as this, at least exposes the 
atter absurdity of the narrow, fallacious, and malignant 
attacks of the free foreign trader when he treats such indus- 
tries wholly and solely as means of enriching the heads of 
the concerns, and them only. A practical illustration of how 
general is the benefit which flows from such industries, how 
thorough the solidarity of great interests, is found in the 
fact that the whole of the last annual dividends of the Penn- 
sylvania Railroad Company — of $6,890,000 — are more than 
represented in the sums paid to that company by four Besse- 
mer steel and iron manufacturing works on the line of the 
road, for freights. 

THE FAEMER AS AN EXTORTIONER. 

But practically the greatest extortioner in the land under 
this theory, with the present protective tariff, is the farmer, 
who has made us more independent of the rest of the world 
than any other American producer, and for this very reason^ 
and who for the crops of 1881 levied taxes upon his poor 
and unfortunate victims as in the table. 

Here is extortion for you! Only $1,780,000 of duties 
collected by the Government, and $264,000,000, or one 
hundred and fifty-five times as much taxation, levied upon 
the people by the farmer 1 Had I selected the crops of 
these products in 188*0, which were nearly one-third larger, 
although they produced $128,000,000 less, absurd as it may 
appear, I should have been able, by following the logic of 
Prof. Perry, to have shown an extortion of $88,000,000 
greater ! 



240 



NECESSARY FOUNDATIONS. 



Table slwwing the amount of imports and domestic productions of 
Cereals and Potatoes fon' the year 1881, toith duties and amounts 
paid into tlie Treasury, with the amount of bounties paid to the 
farmer. 



Akticles. 


Quantity 
Imported. 


Rate 
of Duty. 


Revenue 
received by 
Government. 


Home 
Products. 


Enhanced 

Amount 

Paid to Farmer 

Monopolists. 


Corn, 

Wheat, 

Oats, 


Bushels. 
75,162 
10,583 
65.276 

9,590,938 
4,680 

4,159] 

2,168,049 


Per Bu. 

10c. 

20c. 

10c. 

15c. 

15c. 

10 p. c. = 

4.07c. 

15c. 


$7,516.20 

2.116.66 

6,527.68 

1,438,640.80 

702 00 

t 198.83 

325,207.46 


Bushels. 
1,194,916,000 
383.280,090 
416,481,000 
41,161,330 
20,704,950 

9,486,200 
109,145,494 


$119,491,600.00 

76,656.018.00 

41,648,100.00 

6,774.190.50 

3,105,742.50 

386,088.34 

16,371,824.10 


Barley, 

Rye, . 


Buckwheat,... 
Potatoes, .... 




$1,780,909.63 


$264,433,563.44 



AMEEICAN BLANKETS. 

Prof. Perry makes a strong case against the American 
producer of blankets, but this is readily explained when you 
remember that my very able friend, Prof. Denslow of 
Chicago, exhibited to you here some weeks ago an English 
and an American blanket, the former invoiced at seventy- 
nine cents a pound in England, and the latter, quite equal in 
quality, worth seventy-eight cents in Chicago. Thus is it 
that, having so nearly achieved industrial independence in 
the article of blankets that Prof. Perry is enabled to figure 
out a tax on the consumer of $1,058,000, while the Govern- 
ment only got $1,058 in duties. Had the price of American 
blankets been double what it was, and the domestic supply 
but one-tenth, the extortion would have been but one-tenth. 
This glorious muddle, by virtue of which the cheaper a 
domestic product and the more it is enabled to drive out the 
foreign the greater the extortion, is indeed a profound prin- 
ciple of social philosophy, and one which is deservedly made 
the guiding star of the Becks, the Coxes, the Morrisons, the 



NECESSARY FOUNDATIONS. 241 

McKenzies, tlie Kassons, and the other great American 
statesmen who, by means of this hght, become so eminently 
qualified to direct the destinies of a nation of over 50,000,000 
of people. 

The prices of things depend upon the cost of reproduc- 
tion and upon the volume of products compared with de- 
mand; and this volume of product is itself stimulated or 
depressed by the relation of the prices obtained to the cost 
of reproduction — an absence of remunerative demand, caus- 
ing sooner or later a decline in the volume of production. 

EFFECT OF rRODUCTION ON PRICES. 

The influence of the volume of production on prices was 
never more strikingly illustrated than in the following letter 
from Mr. J. R. Dodge, Statistician of the Department of 
Agriculture, to the Hon. George B. Loring, Commissioner 
of Agriculture, in response to a letter of my own in Janu- 
ary last: 

U. S. DEPARTilEXT OF AgRICTJLTUBE, 

Division of Statistics, 
Washinoton, January 17, 1883. 

Sir: The request of Mr. Henry C. Baird for comparison of 
products and prices of cereals in 1880 and 1881, the former a year 
of great abundance, the latter the worst for production in recent 
times, affords opportunity for instructive comparison of the effect 
of production upon price. 

It will be seen that the crops which were comparative failures 
iu 1881, produced more money than the large crops of 1880. This 
is in part the legitimate result of increased value from relative 
scarcity, in accordance with the law of supply and deniand, and 
to some extent the effect of speculation, of forestalling and "cor- 
nering," for which the small stocks furnished temptations and 
opportunity. 

The rise in the corn was about sixty per cent. , a greater difference 
tlian in the quantities. Unlike wheat, more than a third of which 
i> exported, corn is little affected by foreign demand, as the maxi- 
mum of exportation is only six per cent. The home demand there- 
fore rules in the price of this cereal. 

The crop of oats was an average one, the sole exception in 
11 



242 



NECESSARY FOUNDATIONS. 



cereals of the year. Why did the price advance from thirty-six to 
forty-six cents? Simply because oats can be used interchangeably 
with maize within certain limits. But it could not advance equally 
with that cereal, because its uses are not identical. 

Wheat comes under different conditions. It goes in with the 
product of Europe, India, Egypt, and the shortage of the grand 
aggregate governs the price rather than the shortage in this 
country. It has happened that a very large crop has brought a 
large price per bushel, and a small crop a medium price. In one 
case the surplus of this country was all wanted to supply heavy 
deticiencies elsewhere; in the other, a smaller surplus was in less 
demand abroad. And this apparent anomaly was thus strictly and 
truly the natural result of the commercial law of demand. 

The following table gives the quantities and values, the prices being 
the average for the United States of the crop in the hands of 
farmers on the first day of December : 

1880. 



Ckops. 


Bushels. 


Value. 


Price per 
Busliel. 


Corn, 


1,717,434,543 

498,549,868 

417,885,380 

45,165,346 

24,540,829 

14,617,535 

167,659,570 


$679,714,499 

474,201,850 

150,243,565 

30,090,742 

18,564,560 

8,682,488 

81,062,214 


$0 39.6— 
95 1 + 


Wheat, 


Oats 


36 — 


Barley 


66 6+ 


Rye, 


75.6 + 


Buckwheat, 

Potatoes, 


59.4— 
48 3+ 






Total, 


2,885,853,071 


$1,442,559,918 









1881 



Crops. 


Bushels. 


Value. 


Price per 
Bushel. 


Corn, 


1,194,916,000 

383,280,090 

416,481,000 

41,161,330 

20,704,950 

9,486,200 

109,145,494 


$759,482,170 

456,880,427 

193,198,970 

33,862,513 

19,327,415 

8,205,705 

99,291,341 


$0 63.6— 


Wheat 


1 19 3+ 


Oats 


46.4— 


Barley, 


82.3— 


Rye 

Buckwheat, 

Potatoes 


93.3+ 
86.5 + 
90.9— 






Total 


2,175,175,064 


$1,570,248,541 









NECESSARY FOUNDATIONS. 243 

A study of quantities and prices of the past ten years, on the 
basis of the estimates of this department, will afford much infor- 
mation concerning the fluctuations of production and resultant 
changes in values, and incidentally present very strong evidence 
of the substantial accuracy of the estimates, showing very conclu- 
sively also the absolute necessity of annual statistics of production. 

Respectfully, 

J. R. DODGE, 
Hon. George B. Loeii^g. Statistician. 

PROFESSOR PERRY ANSWERED. 

To me it seems that the facts and the reasoning whicli I 
liave presented against the doctrine of Professor Perry and 
his school regarding prices, are conclusive, and that this let- 
ter in regard to the seven crops named settles the question 
beyond dispute. Not merely have I shown stimulation of 
domestic production to be an accompaniment of protection, 
and that it keeps down price, in the face of a great increase 
in the power of consumption, but that this domestic produc- 
tion is largely destroyed under free foreign trade, and is 
not compensated for by foreign supply, when even with a 
great decline in the power of . consumption, prices advance 
beyond what they were under protection. Further, I have 
accounted for these phenomena by the statement of the 
quantities and values of the great food crops of the United 
States; those of 1881, which were twenty-five per cent, less 
in quantity, producing eight per cent, more money than the 
larger ones of 1880. So great is the influence of supply on 
price, that had we never established the Bessemer rail 
industry, which we would not have done without protection, 
but depended wholly on Great Britain for our supply, even 
though our power of consumption had been far less, the 
price would have unquestionably been greater; indeed, it is 
quite probable on the principles developed by the facts 
shown in regard to the quantities and prices of the Ameri- 
can food crops of 1880 and 1881, that the British product 



244 NECESSARY FOUNDATIONS. 

of steel rails, had it, in 1881, reached even 1,500,000 tons, 
would under such circumstances have produced a larger aggre- 
gate sum of money than the combined British and American 
product of 2,211,510 tons of that year. I have also demon- 
strated the narrowness and the total insufficiency of Pro- 
fessor Perry's premises, by reason of his ignoring these 
great and vital factors, and therefore the fallacious nature 
of his conclusions, which thereby become utterly unworthy 
of a moment's consideration, even on the part of the merest 
tyro in the necessary processes of reasoning. 

BREAKDOWN OF THE FEEE FOREIGN TRADE CASE. 

Nay, more, the entire free foreign trade case, as I have 
shown, breaks down on the question of prices — the only 
claim it presents for our acceptance. A cause which wholly 
ignores the ruin of productive industries for the sake of cheap- 
ness, and after the ruin is accomplished can neither show 
prices so low as before, nor an equal supply, nor an equal 
power of consumption, is unworthy of the acceptance of any 
rational man, unless he be an enemy of the country, or the 
foreigner who is receiving this increased price in the face of 
decreased demand. 

THE BRITISH IDEA OF CHEAPNESS. 

But high prices are not necessarily and always an un- 
mixed evil. Every period of great prosperity in our history 
has been accompanied by high prices, especially of land, 
labor, and raw materials. Those who are in receipt of high 
remuneration for services and commodities in turn make a 
large market for the services and commodities of otLers. 
The idea of cheapness which runs throughout British thought, 
and controls British legislation, and depresses, degrades, and 
brutalizes the great body of the people, is not merely wicked, 
but stupid ; for it works a damage to British industries by 
limiting the volume of the home market; the consumption 



NECESSARY FOUNDATIONS. 245 

of the products of which industries would make the mass of 
people at home comfortable, happy, and civilized, thus alike 
blessing him that gives and him that takes. Cobden in his 
campaigns for the repeal of the Corn Laws, held up to the 
coveting eyes of his poor auditors the idea of "the big loaf," 
as a grand result to flow from the free importation of foreign 
corn, thus ignoring the fact that large bodies of English, Scotch, 
and Irish laborers were virtual co-partners in British agricul- 
ture; and were certain to be injured by a policy which would 
throw vast tracts of land out of cultivation in corn and into 
permanent pasture, in which few hands are needed. This 
British fetich, cheapness, begins in injustice to the great 
mass of the people at home, and ends in wars, robberies, 
opium dealing, and famines abroad, resulting from the efforts 
to obtain additional markets and revenues which should be 
had among its own prosperous, well-paid, and happy people, 
and which would add to the power as well as to the glory of 
the empire; for from the mass of the people really comes the 
national force. 

THE EATIONAL AND PHILOSOPHICAL EOAD TO CHEAPNESS. 

But there is a real, true, beneficent, and civilizing road to 
cheapness. It is found in a diversification of employments, 
the strengthening of the power of the people by means of 
active association, the intelligence w^hich flows from this 
association, and leads to the highest conquests over the 
forces of nature; and of their utilization in propelling 
machinery and producing mechanical and chemical changes 
in the forms of matter. Thus, and thus only, do raw mate- 
rials, including land and labor, tend to rise, because they 
thereby find new utilization; and finished commodities to 
fall, because of the readiness with which they are converted 
into finished forms by the aid of chemical reactions, and by 
machinery propelled by water, heat, steam, gas, and electric- 
ity. Thus, and thus only, does man become free. The 



246 NECESSARY FOUNDATIONS. 

power obtained in the harnessing of natural forces into the 
uses of man will be made clearly apparent when it is con- 
sidered that three tons of coal represent the labor power of 
a man for his lifetime. But when, applied to improved 
machinery of great velocity, working with but little friction, 
this power is at times, by actual computation, multiplied as 
much as five-fold; in other words, three tons of coal then 
representing the labor power of five men for their entire 
lives. In the city of Philadelphia, for instance, there is a 
cotton mill, and not one of enormous size, which in 1877 
manufactured in every day of ten hours 40,000 miles of cot- 
ton yarn, obtaining from eight tons of coal dust the necessary 
power. Supposing it possible for such a quality of yarn to 
be made by hand, it would require the labor of 85,000 
women working for the same number of hours. In 1870 
but 137,876 men, women, and children were employed in 
the productive industries of that city; the products of which 
were of the value of $334,852,458. Thus did this one cot- 
ton mill represent nearly two-thirds of the mere physical 
power of those persons who produced this great body of 
commodities^ By actual computation from the work done 
by the mill in the month of February, 1877, and the cost of 
that work, for human labor to have competed with it unaided 
by machinery, it would have been necessary for that labor to 
have worked for 46|-100 of one cent per day wages. 

"With such increase of force and decline of cost of conver- 
sion in human labor, we may calmly leave prices to regulate 
themselves by means of domestic competition, and the new 
improvements in machinery and the new knowledge of 
chemical reactions which are always taking place in a society 
of high vitality. In such a society the standard arguments 
of the average poHtical economist of the free foreign trade 
persuasion about prices are only worthy of the proprietor of 
a shop where candy is sold by the stick and gingerbread by 
the single cake. The power which Great Britain gets from 



NECESSARY FOUNDATIONS. 247 

coal and machinery is generally estimated as equal to that of 
600,000,000 men, but from a calculation which I myself 
made a few years since, based upon authentic data as to the 
cotton spindles in that empire, I am well satisfied that it is 
at least equal to that of 2,500,000,000 of men. 

THE ARTIFICIAL NATURE OF CIVILIZED SOCIETY. 

But the free foreign trader objects to the imposition of 
duties on foreign merchandise because it introduces an arti- 
ficial element into society, and interferes with his inalienable 
right to buy where he can buy cheapest, and sell where he 
can sell dearest. The fact is, this is prima facie evidence in 
its favor, because this man forms a part of an artificial 
society — one in which the very clothes, abodes, manners, 
customs, and modes of living and being are artificial. Indeed, 
if he is a man of any culture his own countenance is artificial, 
being made up by his surroundings and the knowledge 
which they have given him. The more cultivated and civil- 
ized this society the more fully have the members of it 
departed from nature. The natural man is found in Africa, 
in Patagonia, and in a measure among our Indians. The 
free foreign trader will find his natural rights among such 
men as these, and among bears, wolves, and catamounts, if 
he has the strength and cunning necessary to maintain them. 
There he will find no custom houses, no police, no boards of 
health, no municipal government which will oblige him to 
lay down pavements for other men and their horses and 
vehicles to pass over, nor sewers, nor gas pipes for the use 
of others, nor will he be obliged to pay for the schooling of 
other people's children,_ or be subject to the other restraints 
of civihzed society; but he will probably, after a few hours, 
days, or weeks of this experience, conclude that the restraints 
and privileges of civilization are far preferable to the discom- 
forts and dangers which accompany the untrammelled exer- 
cise of his natural rights in the midst of nature's wild 



248 NECESSARY FOUNDATIONS. 

domain; and elect to become a law-abiding member of a 
society in which the prosperity and happiness of all are the 
guiding star. 

THE RIGHTS OF AMERICAN PRODUCERS. 

And when our free foreign trader comes to look more 
deeply into the nature of this society, he may even be dis- 
posed to abandon his views in favor of free foreign trade on 
the ground of mere justice to our producers. As it is off 
of, or from American production, that the whole people, 
producers and non-producers, live, so it must be on the 
shoulders of American producers that all national, State, 
and local taxation finally rests, unless we can transfer some 
of this taxation to foreigners who seek our markets, which 
are wholly the fruit of American production. It would 
therefore be altogether subversive of the rights of these 
American producers to admit the products of foreigners, 
except upon the condition that they pay a rate of taxation 
equal to that paid by American producers — these latter hav- 
ing rights under their own government, w^hich they entirely 
support, at least equal to those of foreigners. The only 
rational and proper basis for free trade, is that wholly 
between our own people, and not between some of our own 
people and foreigners; and until every possible means are 
taken to cast off the existing shackles which hamper the trade 
between parties wholly American, that between Americans 
and foreigners must be asked to stand aside and wait its 
day of realization in the future, and in a new Utopia. 

THE ARTIFICIAL DEVELOPMENT OF NATIONS AND THEIR IN- 
DUSTRIES. 

In dealing with this society of ours, whicli we call the 
nation, we cannot too clearly, distinctly, and persistently 
bear in mind that it exists, one among many nations, each 
of which has more or less developed an artificial existence, 



NECESSARY FOUNDATIONS. 249 

and not a single one of wliicli has industries all of wMcli 
bear perfect and harmonious relations to each other; that 
some one or more of these countries has one or many in- 
dustries which we ourselves have, and v^rhich are developed 
to a greater extent than our own. Once jnore, we must 
remember that association with his fellow-men is the first, 
the greatest, the paramount need of man; that the more 
complete the diversification of employments, the greater this 
power of association, the greater the motion in society, the 
less the loss of labor-power, the greater the ability to subject 
to the human will and use the forces of nature; the less the 
expenditure of human labor in converting raw materials 
into finished commodities, the greater the power to command 
an ample supply of money, the instrument of association, 
and the lower the rate of interest — the precious metals 
traveling from those places where employments are not 
diversified and where the rate of interest is high, to where 
they are diversified, and where the rate of interest is low. 

The artificial and inharmonious development of the in- 
dustries of other nations calls, in turn, for artificial provis- 
ions against any movements of these industries in the 
direction of the destruction of the more or less happy 
balance of industries existing or trying to exist among our- 
selves — this balance being a measure of the power which we 
ourselves have actually developed. These provisions are 
especially essential the world over against the competing 
industries of Great Britain; the well-recognized and even 
avowed selfish and wicked policy of which is industrial war- 
fare, with a view to the centralization of wealth in the 
would-be work-shop of the world. 

These provisions against the destruction of the harmonious 
balance of industries are known under the name of 

PROTECTION^ 

a policy which not merely rest upon the foundations of justice, 
but which is vindicated by all history; whether that history 
11* 



250 NECESSARY FOUNDATIONS. 

be of England, France, Belgium, Russia, or the German 
Empire, tlie power of all of which has been built up by this 
policy, or of Ireland, Turkey, Egypt, Portugal, India, Japan, 
or Jamaica, the power of which has been destroyed by the 
absence of it. It is vindicated at every step in our own 
history, from the settlement of the colonies to the present 
hour; each period of free foreign trade having caused an 
impoverishment of the people, the colonies, the States, or the 
nation, and each period of protection, after protection be- 
came possible by independence, having caused the rescue of 
both people and governments from wretchedness, bankruptcy, 
and despair. 



CHAPTER XV. 

PROTECTION AND FREE TRADE. 

By Right Hon. Henby Faucett, M.P., D.C.L., F.R.S. 
Professor of Political Economy in the University of Cambridge. 



THE AEGUMENTS OF PROTECTIONISTS. 

AFTER a careful consideration of the arguments wMcli 
are adduced in support of protection by those who 
may be regarded as its leading advocates in America, in the 
Colonies, and in various Continental countries, I think it will 
be admitted that a full and complete statement of their case 
will be given by arranging the arguments whicb are now 
advanced in support of protection under the following thir- 
teen heads. It will be observed that some of these argu- 
ments are of a contradictory character. This circumstance 
is however accounted for by the fact that protection is 
regarded from different points of view, and supported for 
different reasons, in different countries, and 1 have l^een 
anxious to omit no argument to which importance is attri- 
buted by those who defend protection in the various coun- 
tries in which it is maintained: 

1. Protection is desirable, and especially so in a young 
country, because it secures diversity of industry. A country 
such as America or Australia possessing an almost bound- 
less extent of fertile land, has exceptional facilities for the 
production of raw material. If therefore manufactures are 
not. fostered by protection, labor and capital wiU be chiefly 

(251) 



252 PROTECTION AND FREE TRADE. 

devoted to agriculture, and the growth of towns will be 
discouraged. 

2. Protection, by encoui'aging various branches of home 
industry, makes a community much less dependent upon 
foreign countries. 

3. The American protectionists assume that in foreign 
trade the cost of carriage is paid by the exporting country. 
Eaw produce being more bulky than manufactured goods 
of the same value, is more costly to export. They therefore 
argue that America would be placed at a disadvantage com- 
pared with England if she imported all the manufactured 
goods she wanted in exchange for raw produce. 

4. It is said that the home manufacturer has to pay- 
various taxes which are not levied from his foreign com- 
petitor, and therefore if he does not receive some com- 
pensation in the form of protection, he must necessarily be 
placed at a disadvantage. 

5. Protection is advantageous to a countiy because it 
encourages various branches of home trade, and discourages 
to the same extent the trade of foreign countries. 

6. A protective import duty, it is asserted, is ultimately 
almost entirely paid by the foreign producer. Consequently 
protection secures the double advantage of taxing the 
foreigner and of encouraging home industry. 

7. As profits and wages are not higher in protected 
industries than in those which are not protected, the 
objection ordinarily urged against protection — that it benefits 
a special trade at the expense of the general consumer — 
cannot be fairly maintained. 

8. Protection is economically advantageous, because if a 
country obtains its produce at home instead of importing it, 
the labor employed in transporting produce from a distance 
is saved, and this labor is assumed to be unproductive. 

9. Protection is represented as confernng great benefit 
upon the working classes in America, because the wages 



PROTECTION AND FREE TRADE. 253 

wMch are paid in certain industries whicli enjoy protection 
in America are liigher than the wages in the same industries 
in free-trade England. 

10. Protection would be unjust if only one industry were 
protected, because the general public would obtain no com- 
pensation for the increased price they would have to pay for 
the product of this particular industry. They however 
obtain this compensation, if protection is so extended that 
the entire industry of the country participates in its 
advantages. 

11. Protection has been defended on the ground that 
wages being higher in America and in the Colonies than in 
England, the American and the Colonial traders require pro- 
tection in order to place them in a position of equality with 
their English competitors. 

12. Protection, having been once established, cannot be 
abolished without causing great loss to employers and 
employed in those trades which have been protected. 

13. Protection can be advantageously introduced into a 
young country as a temporary expedient, since various 
industries which will ultimately prosper without protection 
require its aid in the early stages of their existence. 

I will now proceed to consider these arguments in the 
order in which they have been stated. 

1. It wiU be observed that in the foregoing enumeration 
of the reasons which are advanced in support of protection, 
the first position lias been given to what is known as the 
" diversity of industry " argument, because there is no single 
point on which so much stress is laid by American and 
Colonial protectionists. 

It is contended that a country which has almost inex- 
haustible supplies of fertile land, considerable portions of 
which are still unoccupied, possesses such exceptional 
advantages for agriculture that its labor and capital will be 
chiefly concentrated on the production of raw produce ; it is 



254 PROTECTION AND FREE TRADE. 

accordingly maintained that although it might be cheaper, 
for instance, for America to purchase from foreign countries 
various articles of manufacture with this raw produce instead 
of making the articles for herself, yet the gain thus secured 
would be dearly bought because of the harm which would 
be done to America if there were no variety in the occupa- 
tions of her people. If scarcely any industry were carried 
on except agriculture, many who were not suited for outdoor 
work but who could acquire a skill which would enable 
them to excel in some handicraft, might find it impossible to 
obtain any employment for which they were qualified; there 
would consequently be a great waste of industrial power. It 
is also alleged that the social development and progress of 
the country would be most seriously impeded if the greater 
part of its population devoted itself to field work, and lived 
in scattered settlements; whereas if manufactures were 
established people would become more concentrated, the 
growth of towns would be ensured, and in addition to the 
foreign demand, there would arise a large home demand 
for agricultural produce. 

It is evident that the whole of this reasoning rests on the 
hypothesis that it is impossible for manufacturing industry 
to exist in a young country unless it receives the fostering 
aid of protection. It can, I believe, be shown that this 
hypothesis is not warranted either by theory or by experi- 
ence. When a country is first settled and is consequently 
very sparsely peopled, it possesses no sufficient supply of 
labor for the establishment of manufactures on an extensive 
scale. Gradually, however, as population increases, there 
will arise various branches of domestic industry which will 
supplement and assist in various ways the labor of those 
who are engaged in agriculture. However purely agricul- 
tural the industry of a country may be, there must always 
be a great deal of work to be done which will provide many 
different kinds of employment besides the mere tilling of 



PROTECTION AND FREE TRADE. 255 

land. Houses and other buildings have to be erected, roads 
have to be made, agricultural implements and machinery 
have^to be repaired, and the cost of carriage will make 
many articles, especially those of a bulky kind, so expensive 
to import that, although labor may be dearer in a new 
country, it will be found cheaper to make the articles at 
home. The various trades and handicrafts which are thus 
called into existence will create an increasing demand for 
skilled labor, and in this way that industrial uniformity 
about which the protectionists express so much alarm will 
be avoided. It has been already explained that the home 
trader, even where no protective duties are imposed, enjoys 
a natural protection so far as the home market is concerned, 
because he can bring his produce to this market at a much 
less cost than can his foreign competitors. 

Although the desirability of securing diversity of industries 
is constantly put forward as one of the chief reasons why 
protection is supported, yet the tariff which is at the present 
time maintained in the United States affords a conclusive 
proof that motives of a very different kind must exercise a 
powerful influence on those who favor protection. It will 
be found by referring to this tariff, that protective duties are 
not solely imposed on manufactures. No article for instance 
is subjected to a heavier import duty than timber. It can- 
not be supposed that by excluding Canadian and other timber 
from the American market, and thus making timber dearer 
than it otherwise would be, the growth of towns will be 
encouraged, and that a greater amount of suitable employ- 
ment will be forthcoming for those who possess the skill 
required in various hajidicrafts and who are not fitted for 
rough outdoor work. Such a duty exercises an influence in 
exactly the opposite direction: for when the home timber 
trade is thus artificially encouraged by protection, a greater 
number of the population are scattered far and wide over 
the country, employed in cutting timber and bringing it to 



256 PROTECTION AND FREE TRADE. 

market. The most serious objection to be urged against 
the policy of imposing duties in order to force into an 
unnatural existence certain branches of industry arises from 
the fact, that when the aid of such an agency has once 
been resorted to, its future operation cannot be controlled. 
Although it may have been intended by those who first 
introduced protection into the United States, to do nothing 
more than give a temporary assistance to certain manufac- 
turers in order to enable them to struggle against the difiB- 
culties which often beset a new industry, yet the aid which 
was thus given, far from being temporary, has been continued 
for nearly a century , and instead of a few products being 
protected against foreign competition there is scarcely a 
single article that can be produced in the United States 
which is not now subjected on importation to a high protect- 
ive duty. This extension of protection is not due to any 
accidental circumstances. Fire is not more certain to spread 
among inflammable material than is protection when once 
sanctioned to embrace a constantly increasing number of 
industries within 'its influence. Each new protective duty 
which is imposed inevitably creates a demand for -more 
protection in other industries. The ironmasters, for example, 
of the United States may not improbably demand a greater 
amount of protection, for high as are the protective duties 
now imposed on imported iron, amounting in some instances 
to 100 per cent., foreign iron still finds its way in consid- 
erable quantities to the American market. In 1874 no less 
than £3,000,000 worth of iron was imported. Although 
this importation subsequently declined, it is now (1881) 
again rapidly increasing. This influx of foreign iron, it 
may be urged, constantly forces down prices, deprives the 
ironmasters and those whom they employ of a part of the 
prosperity to which they are fairly entitled when trade is 
active, and intensifies the depression of adverse times. If a 
demand for more protection were conceded, the supply of 



PROTECTION AND FREE TRADE. 257 

foreign iron in the American market might be greatly cur- 
tailed and the Drice of American iron would be considerably 
increased. But the moment this advance in price occurred 
a signal would be given to demand more protection in a 
great number of other industries. Every article which was 
made of iron would become dearer, and those who had to 
purchase these articles would find a new burden imposed 
upon them. The American cotton and woolen manufac- 
tui-ers might fairly say, '' It has been scarcely possible for 
us to hold our own against our foreign competitors, but now 
that in order to benefit the iron trade the price of iron has 
been increased, as we have to pay more for our machinery ; 
this places us at a disadvantage compared with English, 
French, and other manufacturers ; we have consequently a 
right to demand an increase of protection, in order to com- 
pensate us for the advantage which would otherwise be given 
to our foreign rivals." 

In discussing the various arguments which are adduced in 
support of protection, it will not be sufficient to consider the 
subject simply in its economic aspects. Thus, as already 
stat^, the social and other benefits which are conferred upon 
a country by its possessing a diversity of industries are sup- 
posed to provide an ample compensation for any economic 
loss which may be caused by protection. As complaints are 
constantly made by protectionists that their opponents per- 
sistently ignore all the results of protection which are not 
economic, I shall be careful to consider these results, and I 
shall be the more anxious to do so because without such 
consideration the real magnitude of the mischief which is 
done by protection cannot be adequately understood. There 
is nothing more calculated to exercise a deteriorating influ- 
ence upon a country than to encourage its industrial classes 
to be perpetually looking to the State for assistance. When 
a nation becomes thoroughly imbued with the doctrines of 
protection, it seems to display towards competition the same 



258 PROTECTION AND FREE TRADE. 

sort of helpless terror as is shown by a timid child terrified 
by the fancied presence of a ghostly apparition. The statis- 
tics of exports and imports are eagerly scanned, and when- 
ever the import of any particular article is discovered to be 
on the increase a piteous cry is raised for more legislative 
protection against this growing foreign competition. Instead 
of trjdng to ascertain whether if the foreign producer is 
gaining an advantage, it is not being secured through greater 
industrial enterprise, recourse is immediately had to all the 
political artifices by which any particular trade interest can 
bring its influence to bear on the government. The efforts 
which are thus being constantly made by those engaged in 
different industries to secure legislative aid, have probably 
done more than anything else to encourage that " lobbying " 
and ''wire-pulling" which form such prominent features in 
the politics of the United States. No inconsiderable portion 
of the energy of her public men, which should be devoted 
to further objects of national importance, is employed in 
gaining for some particular trade what is supposed to be the 
privilege of a higher protective duty. This opinion is forci- 
bly confirmed by an able American economist, Proffessor 
W. G. Sumner, who says : 

"This continual law-making about industry has been 
prolific of industrial and political mischief. It has tainted 
our political life with log-rolling, presidential wire-puUing, 
lobbying, and custom-house poHtics. It has been inter- 
twined with currency errors all the way along. It has 
created privileged classes in the free American community, 
who were saved from the risks and dangers of business to 
which the rest of us are liable. It has controlled the elec- 
tion of congressmen, and put inferior men in office, whose 
inferiority has reacted upon the nation in worse and worse 
legislation. Just now we are undergoing a spasm of indig- 
nation at ofBcial corruption, and we want to reform the civil 
service, but there is only one way to accomplish that, and 



PROTECTION AND FREE TRADE. 259 

that is to cut up the whole system which has made the civil 
service what it is." * 

It would therefore seem to be conclusively established that 
protection may produce social and political consequences 
even far more mischievous than the economic loss it causes 
to a country. 

In referring to the social and political influence which is 
exercised by protection, I think it may be well to direct 
attention to the encouragement it may give to one of the 
most serious phases of modern socialism. It may be 
observed that there is a fundamental difference between tho 
schemes of the earlier socialists and the socialism which in 
Germany and many other countries is now received with 
most favor. The chief aim of the earlier socialist was by 
the formation of voluntary associations to effect certain 
social reforms, and they proposed to attain their object, not 
by State assistance, but by conforming to certain rules, 
which they voluntarily imposed upon themselves, as to theii 
mode of life, and as to the distribution of their property. 
The socialists of the present day, however, chiefly hope to 
effect their object by State aid. Whenever a programme oi 
socialism is now put forward, it will be invariably found that 
a demand is urged for an almost indefinite extension of 
State intervention. The State is to supply capital to labor. 
Co-operative associations are to be founded by State loans, 
the land is to be purchased by the State and relet to the 
cultivators, and the State is to regulate the number of hours 
which adults should be permitted to work. This form of 
sociahsm has assumed its most marked development in such 
a protectionist countryas Germany, and I think it cannot be 
doubted that protection must exert an inevitable tendency 
to foster these socialistic demands for State assistance. If a 
people are accustomed, as they must be under a system of 



♦"Lectures on the History of Protection in the United States," by Professor 
W. G. Sumner. 



260 PEOTECTION AND FREE TRADE. 

protection, to believe that the prosperity of each separate 
branch of industry depends not so much upon individual 
energy and skill as upon the amount of protection it can 
obtain from the government, there can be no surer way of 
encouraging the growth of a belief not only that industrial 
prosperity but that the general social well-being of the 
country is chiefly to be secured not by individual effort but 
by State help. 

2. The second argument in favor of protection is, that by 
encouraging various branches of home industry, a community 
is made much less dependent upon foreign countries. 
• This argument may be at once admitted to constitute the 
only logical basis on which a protective system can be sup- 
ported ; for if it could be assumed that the normal condition 
of a country was to be perpetually at war with its neighbors, 
it would become of the first importance to make it, as far as 
possible, industrially independent of them. Under such 
circumstances it might be expedient, at whatever cost, to 
impose protective duties with the view of establishing and 
maintaining various branches of home industry. It is on 
grounds such as these that protection is probably most fre- 
quently defended. Thus the French consider that they are 
amply justified in imposing a protective duty on salt, because 
without such a duty no salt would be produced in France, 
and all the salt w^hich the Fi'ench people consume would 
consequently have to be imported. It is said that in time, 
of war, the coast of France and her frontiers might be so 
effectually blockaded that no salt could be imported ; time 
would be required to create the necessary appliances for its 
manufacture; her people might thus be deprived of the 
supplies they required of a first necessary of life, and they 
would be placed at a great disadvantage in the war in which 
they might be engaged. It is therefore maintained that 
rather than incur this" risk it is better for the French people 
to pay an increased price for the salt which they consume. 



PROTECTION AND FREE TRADE. 261 

Let us, however, endeavor to estimate the exact degree o:f 
risk which France would incur of being deprived of its 
supplies of salt if it were freely imported, and then we shall 
be better able to judge whether the price which is now paid 
to avert this supposed danger can be regarded as a wise and 
judicious expenditure. 

It is scarcely possible to imagine any conjuncture of cir- 
cumstances which would cause France to be engaged in 
such an universal war that she had not a single ally or a 
smgle neutral power on her frontier. The first Napoleon 
was at one time carrying on war with the greater part of 
Europe; and yet there was never a moment even in his 
unparalleled career of military aggression, when all the 
coasts and all the frontiers of France were so completely 
blockaded that no foreign product could find its way to her 
markets. There would, therefore, seem to be every reason 
to conclude that the danger which protection is supposed to 
avert is a purely imaginary one. But even if we admit 
the bare possibility of its occurrence, the question is at once 
suggested, cannot some other means be devised of guard- 
ing against it, which will prove less burdensome to a country, 
than compelling its entire people, whether rich or poor, to 
pay an unnecessarily high price for articles of the first 
necessity? The consumption of salt in France for domestic 
purposes may be estimated at about 380,000,000 lbs. Salt 
is subjected to an excise duty in France of 4s. per 
cwt. ; but the duty which is imposed on foreign salt when 
imported being thirty-three per cent, higher than the excise 
duty, French salt is by this duty so effectually protected, 
that scarcely any salt is imported. It is affirmed on the 
authority of those who have an intimate practical knowledge 
of the salt trade that this restriction of foreign importation 
increases the price of salt in France by a halfpenny a pound ; 
consequently, the protective duty imposes a tax on the French 
consumers of salt of at least £750,000 a year, beyond the 



262 PROTECTION AND FREE TRADE. 

amount which the duty on salt yields to the French revenue. 
When it is remembered that salt is used for many purposes 
in manufacturing and agricultural industry, it is a moderate 
estimate to assume that the protective duty on salt annually 
im^poses a fine of £1,000,000 on the French people, beyond 
the amount which is directly levied from them by the salt 
tax. The £1,000,000 a year is taken from them, in order 
to give encouragement to the home manufacture of salt, 
and in order to make France independent of foreign sup- 
phes. It has also to be borne in mind that the protective 
duty, although it imposes this heavy fine on the French 
people, far from adding anything to the revenue, actually 
diminishes it to a considerable extent. If no protective 
duty were imposed on foreign salt, and if the excise and 
import duty were exactly the same, the price of salt would 
be materially reduced in France; the consumption of salt 
would consequently be increased, and the revenue would be 
proportionately augmented, if the import duty were reduced 
to the same rate as the present excise. Not only, therefore, 
does protection injure the revenue, but by unnecessarily 
increasing the price of salt it imposes a tax of at least 
£1,000,000 a year on the French people. Not one shilling 
of this large amount can be appropriated by the govern- 
ment to the general purposes of the State, for it has to be 
entirely devoted to compensate the French manufacturers 
of salt for the disadvantages under which they carry on 
their industry, compared with the favorable conditions 
under which salt can be produced in England and in other 
countries. 

It is not necessary to express any opinion here with regard 
to the expediency of taxing such a necessary of life as salt. 
I am simply attempting to trace the effect of preventing the 
importation of salt by a protective duty ; and however high 
the duty imposed on salt might be, it would cease to be protec- 
tive if home-made and foreio;n salt were taxed at the same rate. 



PROTECTION AND FREE TRADE. 263 

From the figures just given, an idea can be formed of the 
price which is annually paid by the French people, with the 
object of guarding themselves against the remote contin- 
gency of a war so universal that every avenue by which 
foreign produce could find its way into France would be 
completely closed. As such an event has never yet hap- 
pened, the greatest alarmist can scarcely suppose that it will 
occur more than once in a century. It would thus appear 
that in order to provide against it a contribution amounting 
in the aggregate to £100,000,000 would l^e levied from the 
French people. 

If this policy of making a country independent of for- 
eigners is to be carried out, it will not be sufficient simply 
to protect the home manufacturer of salt against his foreign 
competitor. The home production of numerous other articles 
must be similarly fostered ; the price of all these must be 
artificially raised to such a point as will compensate the 
home trader for the disadvantages under which he may 
have to carry on his industry, and thus the loss which is 
caused to France by making her independent of foreign 
countries for her supplies of salt, may be indefinitely in- 
creased. A most serious burden might in this way be cast 
upon the entire industry of a nation, and even in periods 
of profound peace a country would thus be virtually mak- 
ing the most costly preparations for war. If it were really 
worth while to take precautionary measures against a danger 
so shadowy and remote, it would be far cheaper on the eve 
of hostilities to accumulate stores of the products which are 
imported, than for a people constantly to have to bear the 
serious loss which is inflicted on them by articles which they 
are obliged to purchase being made unnecessarily dear. 
When commerce is unhampered by restrictions, the natural 
action of trade secures on the eve of war the accumulation 
of stores of commodities the importation of which is likely 
to be interfered with. The forces of self-interest would in 



264 PROTECTION AND FREE TRADE. 

tliis way effectually operate without the intervention of the 
government. 

Although the supposed desirabihty of making a commu- 
nity independent of foreign countries is one of the argu- 
ments most commonly advanced in favor of protection both 
in America and in our -colonies, yet all the reasons which 
have been adduced against protection being maintained for 
this purpose by such a country as France apply with tenfold 
force to the United States and Canada. Great as is the 
improbability that France can ever be cut off from her sup- 
plies of foreign products, the improbability is still greater 
that the United States, Canada, and Australia, with their 
thousands of miles both of land and sea frontier, could 
ever be so completely surrounded by hostile forces that 
they could not continue to obtain supplies from foreign 
countries. 

3. It is argued in favor of protection, and especially by 
writers on the subject in America, that the cost of exporting 
produce being paid by the exporting country, America 
would be placed at a disadvantage compared with England 
if the commerce between the two countries consisted chiefly 
in sending raw produce from America in exchange for manu- 
factured goods; because the former, being in proportion to 
its value more bulky than the latter, will be more expensive 
to export. 

It can be readily shown that this argument possesses no 
validity, for it is based on the erroneous assumption that the 
cost of exporting produce is paid by the exporting country. 
In order to prove the fallacy of this assumption, let us 
inquire what would be the effect of reducing from 65. to 'Ss. 
the cost of sending a quarter of wheat from New York to 
Liverpool. If, after this reduction in freight took place, 
American wheat continued to sell in England at the same 
price as it did before, the profit realized on every quarter of 
American wheat sold in England would be increased by 35. 



PROTECTION AND FREE TRADE. 265 

This opportunity of securing extra profit would inevitably 
cause increased supplies of American wheat to be sent to 
England, and this would continue until the price of Ameri- 
can wheat was so much reduced in England that it was not 
more profitable to sell it there than in America. The differ- 
ence in the price of wheat in New York and in England 
cannot be permanently greater than the cost of exporting 
wheat from New York to England. If therefore this cost is 
reduced, the price of American wheat in England must be 
also reduced by nearly an equivalent amount. The fall in 
price would not probably be quite equal to the reduction in 
the cost of carriage; because as American wheat became 
cheaper in England the demand for it would become greater, 
and this increase in demand might produce a slight rise in 
its price in America. It still, however, is certain that a les- 
sening of the cost of carriage would produce a reduction of 
price in the importing country of almost exactly the same 
amount, and consequently it follows that the cost of carriage 
instead of being borne, as is assumed by American protec- 
tionists, by the exporting country, falls almost entirely upon 
the importing country. It is obvious that the first e:ffect of 
a rise in the freight between America and England would be 
to increase the price, to the English consumer, of wheat and 
all other produce imported from America; and any reduc- 
tion in freights would in the same way confer a greater 
advantage upon England than upon America, because the 
price of all American produce in the English market would 
be reduced by an amount nearly equivalent to the saving in 
the cost of carriage. 

4. The next argument advanced in support of protection 
is that the home-trader needs protection, because, since he has 
to pay various taxes which cannot be levied from his foreign 
competitors, it is necessary, in order to place him in a posi- 
tion of equality with them, that he should receive some com- 
pensating advantage. 
12 



266 PEOTECTION AND FREE TRADE. 

Witli regard to this argument it may be remarked tliat the 
foreign producer has to pay the taxes which are imposed in 
his own country, and it is a mere matter of chance whether 
these taxes in the aggregate are heavier than those that are 
imposed in the protectionist country. If protectionists argue 
that the burdens on production are always more onerous in 
a protectionist country, such an admission may be fairly 
regarded as a conclusive condemnation of the protectionist 
system. The aggregate amount which has to be raised by 
taxation in an old country, such as England, is in proportion 
to her population far larger than is required by the G-overn- 
ment in the United States. The imperial revenue raised in 
England at the present time represents a charge of about £2 
lOs. a head; whereas in the United States the charge is less 
than £1 IO5. a head. If, therefore, the raising of this larger 
amount in England proves less burdensome to her industry 
than the raising of a smaller amount in protectionist coun- 
tries, it proves that their system of taxation is radically 
defective. 

It is also worthy of notice that if the home-trader is to be 
protected in proportion to the taxation which he has to bear, 
each addition that is made to taxation in a protectionist country 
will become doubly burdensome to the general community; 
because it wiU create a demand for fresh protection. Thus, 
if a larger revenue is required in America, and it becomes 
necessary to impose a tax on dwelling-houses and business 
premises, the American manufacturer would immediately 
put forward a claim for more protection. He might, for 
instance, urge that before this new taxation he was only just 
able to compete with his foreign rivals; the new burdens 
which he has to bear will place him at a disadvantage, and 
he will, therefore, claim that he should be compensated by 
heavier import duties being imposed on the goods which 
come into competition with those which he produces. The 
price of cotton and woolen goods, of iron, and of various 



PROTECTION AND FREE TRADE. 267 

other manufactured articles, would thus be increased through 
the imposition of these higher duties. Consequently the 
people would be doubly taxed: they would not only have to 
provide the additional revenue which is required, but they 
would have to pay a higher price for all those various articles 
which were subjected to increased import duties. The 
increase of these duties, although extremely burdensome to 
the people, might not yield any additional revenue to the 
State; on the contrary, importation would probably be 
restricted, and thus the revenue yielded might be less than 
it was before. 

The argument we are now considering affords a striking 
illustration of the mischievous influence which must be 
exerted by protection if a policy of commercial restriction is 
carried out with logical consistency. The tendency of pro- 
tection must necessarily be to deprive the population of the 
country in which it is maintained of the advantages arising 
from any improvements in productive industry which may 
be introduced into other countries. Thus, if the production 
of a manufactured article were cheapened in England, so 
that the English manufacturer was able to sell it in France 
at a reduction of ten per cent, on its former price, the French 
manufacturer might not improbably put forward a claim to 
higher protective duties. It would be in strict accordance 
with the principles of protection if this claim were granted; 
and if it were granted the French people would lose the 
benefit they would otherwise gain in being able to purchase 
a particular article at a considerably reduced price. In the 
absence of protection, the home manufacturer who found 
himself placed at a disadvantage in consequence of his for- 
eign competitor having adopted some improvement would be 
stimulated to adopt the same improvement, so as to be able 
to sell his goods at the same rate as the foreigner. It would 
thus become a trial of skill against skill instead of a compe- 
tition of skill against restriction. 



268 PEOTECTION AND FREE TRADE. 

5. One of the most important advantages claimed for 
protection by its advocates is that it not only encourages 
various branches of home industry, but discourages the trade 
of foreign countries to a corresponding extent. 

Thus it is argued that if iron were freely imported into 
the United States the many millions which are now expended 
in America in the purchase of iron, instead of being distrib- 
uted among the American manufacturers of iron and their 
workpeople, would be sent to England. Such a transfer it 
is assumed would enrich England and impoverish America. 
It is, however, evident that those who hold this opinion must 
consider that a community is injured by any circumstance 
which promotes the prosperity of neighboring countries. 
Protectionists may perhaps hesitate to avow such a 
doctrine when stated in plain terms, but it can be readily 
shown that this is the conclusion to which the principles they 
profess inevitably lead. 

Protection, as previously remarked, may be regarded as 
a survival of the mercantile system ; the opinions which 
were propounded by its adherents bear a remarkable resem- 
blance to those which are expressed by the protectionists of 
the present day. Thus when they insist on the harm which 
would be done to America if iron were more largely imported 
from England, they constantly speak as if the additional 
iron which would be bought from England would have to 
be paid for in hard cash, and it seems to be thought that 
America would constantly have more and more money 
drained away from her. Nothing, however, is more certain 
than that if America purchased goods more largely from 
England, the English people would in their turn increase 
their purchases of American produce. If it were advanta- 
geous for a country as far as possible to diminish the 
quantity of products imported, that country would derive 
the maximum profit from foreign commerce whose exports 
were large compared with her imports. To secure a large 



PROTECTION AND FREE TRADE. 269 

excess of exports over imports seems in fact to be the goal 
to reach which protectionists are ever striving. Side by side 
with the imposition in the United States of innumerable 
import duties, many of which are so high as to be prohib- 
itive, such eager anxiety is shown that not the shghtest 
impediment should be thrown in the way of foreign coun- 
tries freely purchasing American produce, that not only is 
no proposal ever made of levying an export duty in the 
United States, but the imposition of such a duty is forbidden 
by the American constitution. Amongst French protection- 
ists the same terror is shown of an excess of imports over 
exports. Thus in an address of the Chamber of Commerce 
of Blbceuf, protesting against the renewal of the Commercial 
Treaty with England, it was stated that whereas in 1875 the 
exports of France exceeded her imports by 297 million 
francs, in the next year the imports were in excess of the 
exports by 271 million francs, and it was said that conse- 
quently there had been a transfer in this period of nearly 
600 million francs ''to the prejudice of France." But if a 
country is benefited by its exports and injured by its imports, 
we are led to the conclusion that a community is enriched in 
exact proportion to the smallness of the return which it 
receives in exchange for the produce which it sends abroad. 
But if this were the case a community would derive the maxi- 
mum advantage from foreign commerce when in exchange 
for various useful products which it exported it received 
scarcely anything except money. Such a result might no 
doubt be brought about if a protectionist policy were carried 
out with sufficient completeness. Suppose for instance that 
protective duties were increased in the United States ; the 
quantity of articles imported from England and other coun- 
tries might be greatly diminished, while the demand of 
these countries for American produce would continue. If 
English harvests, for example, were deficient and America 
had wheat to spare, this wheat would be gladly purchased 



270 PROTECTION AND FREE TRADE. 

by the English people. They would not deprive themselves 
of bread because America had increased her import duties. 
If, however, produce continued to be thus exported while 
imports were more and more reduced, a larger portion of 
these exports would have to be paid for with money, and 
a larger amount of money would consequently have to be 
annually transmitted to America. This being the case, the 
question is at once suggested, would such a transmission 
of money be more advantageous to America than if, in 
exchange for the products she exported, she obtained 
various manufactured goods and other articles which would 
minister to the wants and enjoyments of her people ? 

The value of gold and silver is determined by the same 
laws as those which regulate the value of other articles of 
mineral produce. If money were constantly poured into 
a country in the manner just supposed, its supply would 
be increased, and its value would proportionately diminish. 
Hence, a commerce which consisted in exporting useful 
products in exchange for money, instead of being peculiarly 
beneficial would really be specially disastrous to a country; 
for produce would be sent abroad which might be used 
in furnishing the people with the necessaries and enjoy- 
ments of hfe ; and in exchange for the real and tangible 
advantages which were thus parted with, nothing would 
be secured but an increased supply of money, with a 
consequent depreciation in its value, producing a rise in 
general prices. 

The policy having been once commenced of creating 
a "favorable balance of trade" by discouraging imports, 
could not be continued without imposing more and more 
onerous and mischievous restrictions on commerce. The 
rise in general prices which it has been shown would occur 
in America if she were chiefly paid for her exports with 
money and not with produce, would obviously tend to 
diminish the amount of her exports and to increase her 



PROTECTION AND FREE TRADE. 271 

imports. If wlieat and maize and other articles became 
dearer in America a less quantity of these articles would 
be purchased by other countries, and consequently her 
exports would diminish. At the same time the rise in 
prices in America might make it profitable for England 
and other countries to send goods there which before could 
not be sent except at a loss, and this increase in imports 
would cause the imposition of higher protective duties to 
be demanded. 

The case which has just been investigated affords another 
example of the fact that any injury which a country inflicts 
on the commerce of other nations, instead of yielding her 
any advantage, is sure sooner or later to react upon herself, 
and generally with redoubled force. Protectionists, as we 
have seen, are always most anxious to promote exports and 
to discourage imports ; and yet every new protective duty 
which is imposed is just as effectual in impeding an export 
trade as if a duty were levied on every article which is sent 
abroad. It has, for instance, just been shown that an inevit- 
able result of a protectionist poHcy is to make the articles 
which are exported dearer, and consequently to diminish 
the foreign demand for them. This falling off in the foreign 
demand will still further be aggravated by the loss which a 
country inflicts on others besides herself by the maintenance 
of a protective tariff. England no doubt suffers seriously 
from the protective duties of America, but the more serious 
the injury which is thus inflicted on her, and the greater the 
loss of wealth which it causes, the more will her power of 
purchasing the goods which America wishes to send her 
be diminished. If trade improved in England, if employ- 
ment became more abundant, if profits increased and wages 
advanced, there is not a single article of general consump- 
tion for which the demand would not increase ; and this 
increase in demand is just as certain to take place, whether 
the article is made at home or whether it is imported. 



272 PROTECTION AND FREE TRADE. 

As it is probable that protection derives special encour- 
agement from the erroneous opinions so often entertained 
as to the real significance to be attributed to what is termed 
"the balance of trade," the question will be again referred 
to in the next chapter, in which will be considered the 
subject of industrial depression. I think it will then be 
seen that an unfavorable balance of trade need not neces- 
sarily indicate that there is anything unsatisfactory in the 
industrial condition of a comitry ; for the normal condition 
of English trade is for the imports largely to exceed the 
exports, and reasons will be adduced to show that this 
excess may be taken as one of the surest evidences of the 
remarkable accumulation of the wealth of England in recent 
times. 

6. It is argued by protectionists that a protective import 
duty is ultimately almost entirely paid by the foreign pro- 
ducer, and it is therefore supposed that protection secures the 
double advantage of compelling foreign countries to con- 
tribute to the home revenue, while at the same time encour- 
agement is given to home industry. 

This argument is supported with much ingenuity by a 
well-known American economist, Mr. Francis Bowen.* It 
is contended by him that if America imported £40,000,000 
worth of manufactured goods when an import duty of 10 
per cent, was levied, and if when this duty was raised to 
35 per cent, only £20,000,000 worth of goods were im- 
ported, the Government would not only obtain a largef 
revenue from the smaller importation, but England in 
consequence of the falling off in the demand for her goods 
would be compelled to sell them at a lower price. It is 
therefore urged that the effect of a protective duty is to 
enable a country to purchase foreign produce at a cheaper 
rate, and consequently the country which maintains pro- 



* See American Political Ecoiwmy, by Francis Bowen, p. 487. 



PROTECTION AND FREE TRADE. 273 

tection is placed in a position to make a better bargain 
with those from whom this produce is bought. In this 
reasoning the fact is altogether ignored that although the 
price which the English may obtain for their goods is 
somewhat less than it was before the duty was raised, yet 
this reduction in price is extremely trifling compared with 
the extent to which the price is raised in the importing 
country in consequence of the increase of duty; therefore, 
although those who purchase the article in America may 
not find its price advanced by the full amount of the 
increased duty, the advance will yet be sufficient to cause 
by far the greater part of the duty to fall upon those who 
consume the article in America, and not upon those who 
produce it in England. 

In order to show this, let it be assumed, following the 
example given by Mr. Bowen, that 100,000 pieces of 
woolen cloth, the value of which in England is £1,000,000, 
are exported from England to America when the import 
duty is 10 per cent. Suppose the cost of the carriage of 
this cloth is £1 a piece, and the duty being 10 per cent, 
will also be £ L a piece. Consequently the price at which 
the cloth will sell in America will be approximately £12 a 
piece, because the price must be sufficient to provide a 
compensation for the cost of carriage and for the duty. If 
the price were more than sufficient to do this it would be 
more profitable to sell cloth in. America than in England, 
and the price would be inevitably forced down by those 
who had cloth to sell being naturally anxious to secure the 
advantage of this extra profit. If, on the other hand, the 
difference in the price of cloth in the American and 
English markets were not sufficient to pay the cost of 
carriage and the duty, then it would be less profitable to 
sell English cloth in America than in England, and English 
manufacturers would consequently refuse to export cloth. 
When the duty is raised from 10 per cent, to 35 per cent,. 
12* 



274 PROTECTION AND FREE TRADE. 

a piece of cloth wMch was worth £10 in England would 
have to be sold in America not at £12 but at £14 lOs., 
because the difference between its price in the two markets 
must be sufficient to cover the duty as well as the cost of 
carriage; the cost of carriage is still £1, but the duty, 
having been raised from 10 per cent, to 35 per cent., is 
£3 105. The protectionists, however, are no doubt right 
in their contention that with this great increase in the price 
of English cloth in America there would be a consider, 
able falling off in the American demand. Accepting the 
hypothesis on which the argument advanced by Mr. Bo wen 
is based, let it be assumed that the importation of English 
cloth into America is reduced from 100,000 to 50,000 
pieces. This diminution in the demand for cloth would 
undoubtedly affect its price in England, but the reduction 
in price would inevitably be small when compared with 
the increase of duty. The price cannot permanently fall 
below such a point as will make the manufacture of cloth 
less remunerative than other branches of industry. 

It would be an excessive estimate to suppose that a falling 
off to the extent of one -half in one branch of the foreign 
demand for English cloth, resulting from an increase of the 
American protective duties, would cause a reduction in 
price of 10 per cent. But even if it is assumed that the 
price is reduced by this amount, a piece of cloth which 
before was worth £10 in England would now be worth £9, 
and its price in the American market would be £13 35. 
instead of £14 IO5.; because the difference in its price in 
the two markets must be sufficient to pay the cost of 
carriage, which is £1, and the duty, which is £3 3 5., being 
35 per cent, on the value of the cloth which is now £9. It 
therefore appears that although the price of English cloth 
in America is not advanced by the full amount of the in- 
crease of duty, yet the price is raised from £12 to £13 35.; 
in fact cloth is made so dear that the American people can 



' PROTECTION AND FREE TRADE. 275 

only afford to buy half as mucli from England as tliey 
formerly purchased. An injury will no doubt be inflicted 
on English trade by this falling off in the American demand; 
it must, however, be borne in mind that the loss which may 
be thus caused to a special branch of English industry may 
bring with it a compensating advantage. Thus it has been 
assumed that owing to less cloth being exported to America, 
cloth becomes cheaper in England by 10 per. cent. Every 
one therefore who wishes to purchase English cloth, whether 
at home or abroad, will be benefited by its being thus made 
cheaper. With this fall in price, the general demand will 
increase; this will inevitably lead to a considerable recovery 
in the price of cloth, and this circumstance will go far to 
compensate the English manufacturers for the falling off in 
the American demand. 

It therefore appears that instead of a protective duty 
being chiefly paid, as American and other protectionists 
suppose, by foreign countries, such a duty must cause a 
much more serious loss to the community which imposes it 
than it causes to those countries who export the produce 
on which the duty is levied. Thus it has been shown in 
the foregoing example, that whatever loss might ultimately 
be caused to the English cloth manufacturers by an increase 
of the American import duties on cloth, this loss is, so 
far as the English people are concerned, accompained by 
the advantage that they are able to purchase cloth at a 
somewhat lower price. One special branch of Eng^lish 
trade is injured; whereas- the general body of English 
consumers are benefited. In America, however, where the 
higher protective duty -is imposed, exactly the reverse takes 
place. Whatever effect the increased duty may have upon 
the American cloth manufacturers, the increase of the duty 
causes a most serious loss to the American people. 

The arguments that are adduced in favor of protection 
so habitually ignore the interests of the general consumer, 



276 PROTECTION AND FREE TEADB. 

that it is of tlie first importance to remember that in the 
case just investigated, the increase of the protective duty 
on cloth would not simply raise the price of imported cloth, 
but would produce a corresponding advance in the price of 
all the cloth which was purchased by the American people, 
whether of home or of foreign manufacture. If, therefore, 
of the entire cloth used in America, only one-twentieth were 
imported, the protective duty on cloth would impose a 
fine on the American people twenty times as large as the 
amount which the import duty yielded to the revenue. The 
injury therefore which is done to a foreign country by the 
imposition of a protective duty, is trifling compared with 
the injury which the country imposing the duty inflicts on 
herself. 

7. A striking illustration is afforded of the opposite 
aspects under which the advantages of protection are repre- 
sented by its advocates, when it is argued that the general 
body of consumers cannot be injured by protection, because 
profits and wages are not higher in the protected industries 
than m those which are not protected. 

The employment of such an argument is imprudent, 
because the fallacy which it involves can be readily ex- 
plained; while the admission it contains, as to the equality 
of wages ' and of profits in protected and unprotected 
industries, affords a complete refutation of many of the 
arguments on which most reliance is placed by those who 
support protection. Such an admission in fact disposes of 
a very considerable number of the reasons which are ordi- 
narily urged in defense of protection. If it is conceded 
that profits and wages are not higher in trades which are 
protected than in those which are not protected, it at once 
becomes evident, as we have attempted to show in a previous 
chapter, that if commodities are made dearer by protection, 
the loss which is thus caused to the consumer of these com- 
modities is not counterbalanced by any special advantage 



PROTECTION AND FREE TRADE. 277 

being enjoyed by those who supply the capital and labor 
requisite to produce them. "When the price of any product 
is increased through protection, the extra price does not 
represent higher profits or wages, but is simply an equivalent 
for increased cost of production. 

In order to prove the fallacy involved in the argument 
that the consumer cannot be injured by protection because 
the imposition of a protective duty, in any branch of 
industry, does not increase its wages and profits beyond the 
average rate, it is only necessary to consider what would 
be the effect of again levying in England an import duty on 
corn. As previously explained, the inevitable effect of such 
a duty would be to raise the price of corn in England. 
Less foreign corn would be imported, and more would be 
grown on our own soil. This rise, however, in the price of 
corn, as is admitted by the protectionists in the argument 
we are now considering, would not increase the profits of the 
farmer; the extra price which he received for his corn having 
to be devoted to pay the additional rent which now would 
be demanded from him, he would gain nothing; but the fact 
that he is not benefited, would not in the slightest degree 
lessen the loss which would be inflicted on the general body 
of the consumers; for, in consequence of the protective 
duty, every one would find that he had to pay more for the 
bread he purchased. 

8. It is alleged that protection must be economically 
advantageous, because when a country produces commodities 
for itself instead of obtaining them from abroad, the labor 
employed in transporting them is saved, and this labor is 
assumed to be unproductive. 

There is, however, not the slightest foundation for the 
assumption that the labor employed in transporting a com- 
modity is in any degree more unproductive than the labor 
which is employed in actually producing it. The labor of 
the ploughman who ploughs the land on which wheat is 



278 PROTECTION AND FREE TRADE. 

grown, is not more useful or essential than is the labor of 
those who bring the wheat to the place where it is required 
for consumption. The finest fields of wheat would be 
perfectly worthless if the wheat had to be left on the fields 
where it grew. There may be millions of tons of coal at 
the pit's mouth, and this coal would be of no more use than 
if it had never been dug, unless there is labor to convey it 
to the places where it is wanted. 

It is supposed that a coal-field extends under the entire 
town of Liverpool. If this is the case, it would be possible 
for the people of Liverpool to obtain coal close to their own 
doors. This coal, however, being at a much greater depth 
than the coal in other coal-fields in the locality, would be 
more expensive to work. Let it be assumed that the addi- 
tional cost of working the coal will be 55. a ton, and that 
the cost of carrying coal from the coal-fields which now 
supply Liverpool is 25. a ton. It is obvious that this cost of 
carriage would be saved, if the coal immediately below 
Liverpool were worked. But in order to save this 2s., 5s. 
would have to be spent; and, therefore, the net loss on each 
ton of coal used in Liverpool would be 35. 

It therefore appears that saving the labor employed in 
transporting produce is not necessarily economically advan- 
tageous, for the amount thus saved may be altogether inade- 
quate to the increased cost involved in obtaining a com- 
modity under more unfavorable conditions. 

9. Protection has been represented to the working classes 
in America as conferring a great benefit upon them, because 
it is said that wages are higher in the protected industries in 
America than they are in the same industries in free-trade 
England. 

Even if the difference in the remuneration of labor in the 
United States and in England had continued to be as great 
as it was formerly, it is obvious, after what was stated when 
considering the seventh argument, that this difference in 



PROTECTION AND FREE TRADE. 279 

wages could not have been due to protection. It was shown 
that protectionists themselves admit that wages are not 
higher in protected than in unprotected industries; con- 
sequently the greater remuneration which labor obtains in 
one country than in the other must be due to causes which 
are independent of protection, and which exert a similar 
influence upon all employments. A consideration of some 
of the more prominent features in the economic condition 
of England and America, respectively, will at once enable us 
not only to say what these causes are, but will also show 
that far from protection increasing the remuneration of 
labor in the United States, it is gradually depriving labor of 
so much of its productiveness, as largely to reduce the 
difference between the remuneration received by the Ameri- 
can and the English laborer respectively. 

The most striking point of difference in the economic 
position of England and the United States, is the compara- 
tively small quantity of fertile land which is possessed by 
the former country in proportion to its population. The 
quantity of food which is grown in England would be 
altogether inadequate for the support of its population; and 
each year we are becoming more and more dependent upon 
America to make good this deficiency in our supplies of 
food. It is calculated that the ' quantity of wheat annually 
consumed in England is about 22,000,000 quarters; the 
yield of our own harvest has often been not more than 
9,000,000 quarters, and consequently a considerably larger 
quantity has to be imported than is produced by our own 
soil. The quantity of meat, butter, cheese, and other 
articles of food which are annually imported from America 
is rapidly increasing. It is not, however, only with regard 
to food that England has so largely to depend on foreign 
countries for the supplies she requires. A great part of the 
raw material which is used in many of her most important 
manufacturing industries is not obtained from her own soil. 



280 PROTECTION AND FREE TRADE. 

For instance, a very large portion of the wool whicli is 
annually manufactured in England is of foreign growth; 
and the English climate not being suited to the production 
of silk and cotton, all the raw silk and ray/ cotton which 
she requires must necessarily be imported. So large a 
portion of this cotton is obtained from the United States, 
that the value of the raw cotton which is imported thence 
has in some years amounted to more than £30,000,000. It 
therefore appears that the United States, when compared 
with England, enjoys the great advantage of possessing a 
more abundant and cheaper supply, not only of food, but 
also of the products which provide the raw material of 
the most important branches of manufacturing industry. It 
would seem necessarily to follow that wages and profits 
would both be much higher in the United States than in 
England. Fertile land is so plentiful in the former country, 
that it can be obtained in any quantity for the payment of 
almost a nominal sum; whereas those in England who wish 
to cultivate land often have to pay in a single year, in rent, 
as much as would represent the fee-simple of land of the 
same quality in the United States. In the one country the 
entire produce of the land may be devoted to remunerate 
capital and labor: whereas in the other country a not incon- 
siderable portion of the produce has to be appropriated 
as rent. The amount which an English farmer has to pay 
in rent is often equivalent to the entire amount which he 
expends in wages. Consequently, there will be a smaller 
aggregate sum left to be divided in the form of profits and 
wages amongst those who have supplied the capital and 
labor requisite for the cultivation of the land. It therefore 
appears that a higher rate of profits and wages must be 
yielded by agriculture in the United States than in Eng- 
land, and as it has been proved that wages and profits in 
different industries in the same country approximate to 
equality, it follows that capital and labor ought both to 



PROTECTION AND FREE TRADE. 281 

obtain a higher remuneration in the United States than in 
England. This higlier remuneration is due to circumstances 
which are altogether independent of protection. It can, 
moreover, be shown that an influence of so exactly an oppo- 
site kind is exerted by protection, that at the present time 
it is imposing on the industrial classes in America a burden, 
which to a considerable extent is neutralizing the advantages 
conferred upon them by the possession of those great nat- 
ural resources to which attention has just been directed. 

After what has been stated in a previous chapter, the 
prejudicial effect which must be exercised upon -the remu- 
neration of labor by such a protectionist tariff as that which 
is now maintained in the United States will be readily 
understood. A protective duty, by making the product on 
which it is imposed unnecessarily dear, virtually levies a tax 
from all those who purchase it. When the commodities 
which are subjected to such a duty are those in general use, 
the effect of the duty is precisely the same as if an income 
tax were levied from the entire community. Such a tax 
cannot be adjusted or equalized as is the case with the 
income tax in our own country. Small incomes cannot be 
exempted; for, however poor a man may be, the tax will 
fall with unerring certainty on all *hat portion of his income, 
or his wages, which is expended in the purchase of those 
articles which are protected. But this is not the only tax 
which protection compels a community to pay. When the 
instruments and the plant of industry are made more costly, 
the products of that industry necessarily become more ex- 
pensive. Iron, copper, and. timber are, as we have seen, all 
made dearer in the United States by protection. Conse- 
quently, the machinery which is made of copper and iron 
becomes more expensive; the cost of buildings also, in the 
construction of which iron and timber are used, is increased; 
and this being the case, those who pay a higher price for 
this machinery must be compensated by obtaining a higher 



282 PROTECTION AND FEEE TRADE. 

price for the products wMcli they manufacture; and those 
who erect the buildings will be able to claim an increased 
rent, in order that they may be adequately remunerated for 
the additional cost of their construction. 

Protection is thus, in a thousand different ways, per- 
petuaUy taxing the American people. There is not one 
single branch of her industry on which it^does not impose a 
penalty more or less severe. Its influence may he traced 
far and wide over the country. It increases the cost of the 
implements by which the land in the far "West is tilled ; it 
causes a higher rent to be paid by the poorest artisan lodged 
in a back street in New York. The burden thus cast upon 
the industrial classes is so severe as to neutralize to a con- 
siderable extent her great natural advantages. Although 
wages are considerably higher in the United States than in 
England, much of the advantage which labor should derive 
from these additional wages is lost in consequence of ahnost 
every article in general use being made unnecessarily dear 
by protective duties. The wages of an American workman 
are in this way deprived of an important part of their pur- 
chasing power, and when trade becomes depressed the effects 
of industrial depression are from this cause, as will be sub- 
sequently shown, most seriously aggravated. 

10. "When protection has once been introduced into a 
country, it is argued that it should embrace as many indus- 
tries as possible; because if only one industry were protected, 
the general pubHc would receive no compensation for the 
higher price which they would have to pay for the product 
of this particular industry. If, however, protection embraces 
the entire industry of the country, each industrial class is in 
its turn benefited, and is amply compensated for the in- 
creased dearness of various articles.* 

* The manufacturing interests are beginning to regard coal, iron ore, pig iron, 
wool, and other articles of domestic production as raw articles, not to be pro- 
tected by duty. If this new doctrine should get a foothold it would destroy the 
whole protective policy of the government. The rule of protection must extend 



PROTECTION AND FREE TRADE. 283 

This argument lias been enforced with much ingenuity 
by M. Alby, a well-known French protectionist. He con- 
tends that if the iron interest alone were protected in France, 
the policy would be absolutely indefensible, because every 
one in France would have to pay more for iron in order to 
give an advantage to those engaged in the French iron 
trade; but he urges that this objection is entirely removed _ 
if all industries are equally protected. For instance, if the 
cloth trade is protected, the benefit which those engaged in 
it are supposed to derive, more than compensates them for 
the loss they have to bear in paying an increased price for 
iron. It has been shown with great clearness by the late 
Professor Cairnes,* that it is impossible to extend protec- 
tion to all industries in the manner here contemplated; and 
even if such an extension were practicable, the compensation 
which it is assumed the community would receive, would be 
entirely illusory. It is obvious, in the first place, that this 
argument entirely overlooks the interests of the professional 
and other classes who obtain their incomes otherwise than 
by trade. A physician with £1,000 a year, or a policeman 
with £1 a week, would find that almost everything he pur- 
chased was made dearer by protection; while his income was 
in no way increased by it. 

With regard to the impracticabihty of extending protec- 
tion to aU industries, it is only necessary to remark that in 
many industries there is no foreign competition, and it is 
consequently impossible to extend protection to them. For 
example: wine is not imported into France, and wheat is 
not imported into America. An import duty imposed upon 

to all labor alike; to the labor of the farmer in producing wool, and to the labor 
of the miner in digging coal, and if it is denied to the farmer and miner it can- 
not justlj be maintained in favor of the mannfactnror. It is labor that is to be 
protected, and not capital. It is, indeed, more important to develop the natural 
resources of the country in the production, mining, and manufacture of such 
articles as wool, coal, and iron, than to protect the higher forms of production, 
where cheap labor is indispensable.— Ji5A?i Sherman, 1884. 
*Leading Principles of Political Economy, p. 454, et seq. 



284 PROTECTION AND FREE TRADE. 

wine in France, or on wheat in America, would therefore be 
of no advantage to the French wine-grower, or the Ameri- 
can farmer. They are consequently precluded from receiv- 
ing any compensation for the higher price which they are 
compelled to pay for the various articles that are made 
dearer through the operation of protective duties. 

11. Protection is defended in America and the Colonies 
on the ground that, as wages are higher there than in Eng- 
land, the American and colonial traders require protection 
in order to place them in a position of equality with their 
English competitors. 

This claim for protection is evidently based on the assump- 
tion that the amount of wages paid to laborers is the only 
element of which account need be taken when considering 
the cost of producing a particular article. The fallacy of 
such an opinion at once becomes apparent, when it is re- 
membered that agriculture is the particular branch of- indus- 
try in which the difference between the wages paid in 
England and those paid in America or Austraha is the 
greatest. And yet it is in agriculture that America and 
Australia can, without the slighest protection, compete most 
successfully against England. The Illinois or Australian 
farmer has to pay his laborers at least two or three times 
as much as is paid by the Dorsetshire or Wiltshire farmer, 
and yet wheat can be produced much more cheaply in 
Australia or America than in England. It is therefore 
obvious that other circumstances, besides the amount of 
wages which may be paid, determine the cost at which 
any particular article can be produced; if this were not 
so, the American farmer would have a much stronger 
claim to protection against the cheap labor of England 
than the American manufacturer. The efficiency of labor 
must manifestly exert quite as much influence on the 
cost of production as the amount of wages which the 
laborers receive. The great abundance of cheap, fertile 



PROTECTION AND FREE TRADE. 285 



land in Australia and America so much promotes the 
efficiency or productiveness of the labor employed in its 
cultivation, that the cost of producing wheat and other 
agricultural products is ' much less than in England, where 
considerably lower wages are paid to farm laborers. 
Again, with regard to mining industry, it is evident that 
various circumstances, such for instance as the richness of 
the mineral deposits and their depth from the surface, 
must exercise a far greater eifect upon the cost of pro- 
duction than the wages which may happen to be paid to 
the miners. In manufacturing industry also, the possibility 
of one country obtaining raw material at a less cost than 
another, may more than compensate the additional expense 
which may be thrown upon the manufacturers of the former 
country by the payment of higher wages. With regard to 
America and Australia, it is to be particularly noted that 
the great natural resources which they possess must confer 
upon them many advantages in industrial competition of 
which there is no probability that they can be deprived. 
Their almost inexhaustible supplies of fertile land give them 
advantages such as are possessed by scarcely any other 
country. Their mineral resources are so great that if they 
suffer from foreign competition, it must be through their 
own want of skill and enterprise. Even in manufacturing 
industry, where it is supposed that protection is most 
needed, it must be remembered, that as England imports 
large quantities of cotton from America, and of wool from 
Australia, these countries must with regard to some most 
important branches of manufacturing industry enjoy the 
advantage of cheaper raw material. It is, moreover, de- 
serving of special remark, that the difference in wages in 
countries between which there is an extensive migration 
of labor must constantly diminish. When emigration has 
continued for some time, the objections to it are sure 
gradually to lessen; it becomes much more of a national 



286 PROTECTION AND FREE TRADE. 

habit, and the prospect of a comparatively small difference 
in the remuneration of labor may be sufficient to induce 
people to leave their own country, if they think they shall 
be settling amongst friends and relations, which would 
prove altogether inadequate if they had to seek a new home 
amongst strangers. This increasing readiness to emigrate 
must exert an equalizing influence on wages, and must 
cause the difference in wages in the two countries, between 
which the migration takes place, steadily to diminish. 

1 2. Another argument against free trade is that protection, 
having been once established, cannot be abolished without 
causing great loss both to employers and employed in those 
trades which have been protected. 

It cannot, I think, be doubted that the loss which might 
be inflicted upon many special trade interests by the aboH- 
tion of protection constitutes by far the most serious obstacle 
in the way of general adoption of free trade. Exaggerated 
estimates are no doubt formed of the loss which would be 
actually caused; but however great may be the stimulufe 
which free trade would give to the prosperity of such a 
country as the United States, it would in my opinion be 
impossible suddenly to abolish protection without causing 
considerable loss to the employers and employed in many 
trades which, through its aid, had been fostered into a kind 
of unnatural existence. No industrial change, however 
beneficial, has ever been introduced without causing some 
loss and inconvenience to certain special classes. The 
mechanical inventions which have done most to enrich 
mankind were not brought into general use without causing 
great loss and suffering to many whose labor they sup- 
planted. Seldom has a class endured more severe hardships 
than were borne by our handloom weavers during the years 
that they carried on a , prolonged and hopeless struggle, 
striving in vain to compete with products which were made 
by machinery at a far cheaper rate. Even stage-coaches 



PROTECTION AND FREE TRADE. 287 

could not be superseded by railways without some indi- 
viduals being injured by tlie change. Although the aggre- 
gate wealth of the country was enormously increased, yet 
in certain special cases property which was before of great 
value became almost worthless. Along the roads which 
used to be our great thoroughfares are still to be found the 
remains of large inns and posting-houses which formerly 
let for many hundreds a year; but immediately the railways 
drew away the traffic these inns so entirely lost their custom 
that they had scarcely any value at all; many of them were 
pulled down, and others were converted into cottages. Any 
attempt to oppose the use of a mechanical invention because 
of the loss which it may cause to certain individuals meets 
with almost universal disapprobation. Nothing, it is main- 
tained, can be more unreasonable than to allow the tem- 
porary interests of a few to stand in the way of the permanent 
advantage of the entire nation. If this principle holds good 
with regard to the benefits conferred upon a nation by the 
introduction of a mechanical invention, it holds equally true 
with regard to the still greater benefits which a nation will 
derive from the adoption of an unrestricted commercial policy. 

13. Protection can be advantageously introduced into a 
young country as a temporary expedient, since various indus- 
tries which will ultimately prosper without protection require 
its aid in the early stages of their existence. 

This argument in favor of protection, which has been 
reserved to the last for consideration, is deserving of special 
attention, not only because of the great weight which is 
attributed to it by the advocates of protection in the 
Colonies and in the United States, but also because it has 
obtained a great amount of importance from the support 
it received from the late Mr. J. S. Mill. In a passage 
which protectionists at the present day so repeatedly quote 
that they seem almost to regard it as the charter of their 
policy, Mr. Mill says: 



288 PROTECTION AND FREE TEADE. 

"The only case in whicli, on mere principles of political 
economy, protecting duties can be defensible, is when tliey 
are imposed temporarily (especially in a young and rising 
nation) in hopes of naturahzing a foreign industry, in itself 
perfectly suitable to the circumstances of the country. The 
superiority of one country over another in a branch of 
production often only arises from having begun it sooner. 
There may be no inherent advantage on one part, or dis- 
advantage on the other, but only a present superiority of 
acquired skill and experience. A country which has this 
skill and experience yet to acquire may in other respects 
be better adapted to the production than those which were 
earlier in the field : and besides, it is a remark of Mr. Rae, 
that nothing has a greater tendency to promote improve- 
ments in any branch of production than its trial under 
a new set of conditions. But it cannot be expected that 
individuals should at their own risk, or rather to their 
certain loss, introduce a new manufacture, and bear the 
burden of carrying it on until the producers have been 
educated up to the level of those with whom the processes 
are traditional. A protecting duty, continued for a reason- 
able time, will sometimes be the least inconvenient mode 
in which the nation can tax itself for the support of such 
an experiment. But the protectionism should be confined 
to cases in which there is good ground of assurance that the 
industry which it fosters will after a time be able to dispense 
with it; nor should the domestic producers ever be allowed 
to expect that it will be continued to them beyond the 
time necessary for a fair trial of what they are capable of 
accomplishing." * 

There is no one more ready than I am to recognize the 
high authority of Mr. Mill as an economist, and I will at 
once admit that the arguments which he advances in favor 
of the imposition of protection in a young country would 

• See Principles of Political Economy, by J. S. Mill, fifth edition, vol. ii, p. 525. 



PROTECTION AND FREE TRADE. 289 

be conclusive if there were a reasonable probability that 
the conditions under which he supposes that such a pro- 
tective duty could be imposed would ever be realized. It 
will be observed in the passage above quoted that he is 
most careful to explain that protection can only be justified 
as a temporary expedient ; and every word which he says 
in support of protection rests on the supposition, that when 
an industry has been fairly established the protective duty 
will be at once voluntarily surrendered by those who are 
interested in the particular industry. It is, however, incon- 
testably shown by what has happened in the United States 
and other countries where protection has been long estab- 
lished, that it is absolutely impossible to impose a protective 
duty under the stipulations on which Mr. Mill so emphatic- 
ally insists. Whatever professions may be made by those 
who first ask for protection that it is only required for a 
limited period, and that it is only needed to enable an indus- 
try to tide over the obstacles which may beset its first 
establishment, it is invariably found that when an industry 
has once been caUed into existence through protection, those 
who are interested in it, whether as employers or employed, 
instead of showing any willingness as time goes on to sur- 
render protection, cUng to the security and aid which they 
suppose it gives their trade with ever-increasing tenacity. 
This is shown in a very striking manner by the experience 
of nearly a hundred years of protection in the United States. 
In no single instance has a protective duty, when once 
imposed in that country, been voluntarily relinquished. Far 
from any tendency being shown by those who are connected 
with the industries wliich enjoy protection to face free 
competition, they constantly display a feehng of greater 
dependence, and demand with reiterated urgency, additional 
safeguards against their foreign rivals. A well-known 
American economist. Professor Sumner, has said : '' Instead 
of strong, independent industries, we have to-day only a 
13 



290 PROTECTION AND FREE TRADE. 

hungry and clamorous crowd of 'infants.'" Again, Mr. 
Wells, with equal force, has remarked : "Although the 
main argument advanced in the United States in support of 
protective duties is that their enactment is intended to 
subserve a temporary purpose, in order to allow infant 
industries to gain a foothold and a development against 
foreign competition, there has never been an instance in the 
history of the country where the representatives of such 
industries, who have enjoyed protection for a long series of 
years, have been wilhng to submit to a reduction of the 
tariff, or have voluntarily proposed it. But, on the contrary, 
their demands for still higher and higher duties are insa- 
tiable and never intermitted."* 

No amount of theoretical reasoning as to the desirability 
of imposing a protective duty as a temporary expedient in 
a young country, can outweigh the warnings derived from 
experience that no security can be provided against the 
permanent continuance of a protective duty when it has 
been once imposed. If, after protection has been in opera- 
tion for nearly a hundred years in the United States, the 
various protected interests display a growing determination 
to resist any change in the direction of free trade, what 
reason is there to suppose that what has happened in 
America will not in future years occur in Australia and 
othej countries, if they should carry out the policy which 
now seems to find favor with them, of calling into exist- 
ence various branches of industry by the imposition of 
protective duties ? ' 

* "Cobden Club Essays," second series, 1871, p. 529. 



CHAPTER XVI. 

PROTECTION AND ITS USES. 

By Professor W. D. Wilson, * 

Cornell University. 



WHAT MAKES A TARIFF PROTECTIVE. 

ATAEIFF, to be protective to any particular form of 
industry, must, of course, always be equal to the 
difference between the rate at wMch tbe. commodity can be 
produced in the country of its production, and tliat at which 
it can be produced in the country of its consumption. Thus, 
if cotton cloth can be produced in England, and sold, after 
cost of transportation here, for ten cents per yard, and it 
cannot be produced here for less than twelve, two cents per 
yard would be a protective tariff, and anything below that 
could not operate as protection ; above that, it would be, 
virtually, prohibition. 

EFFECT OF A TARIFF THAT IS BELOW PROTECTION". 

A tariff that falls below the point at which it is protective, 
cannot fail to increase the price of the article to the con- 
sumer ; for it would raise the price of the article by the 
amount of the tariff, without creating any competition 
among domestic producers, so as to reduce the price, by 
means of their competition, one with another. 

*" First Principles of Political Economy with reference to Statesmanship and 
the Progress of Civilization." Phila., H. C. Baird. 

(291) 



292 PROTECTION AND ITS USES. 

Or again, a tariff upon articles, tliat for any reason a 
nation cannot produce, as for example, cotton in England, 
would only enhance the price to the extent of the tariff, and 
for the same reason, as a "revenue tariff," as it is sometimes 
called, would raise prices there permanently. There are, or 
can be no domestic producers to reduce it by competition, 
(1) among themselves, or (2) with foreign producers. 

A tariff then, upon articles which we cannot produce, or 
a tariff that fails to be protective upon what we can produce, 
but does not, only increases the price of the article to the 
consumer. 

And even a tariff for protection, if it be needed at all for 
that purpose, will raise the price of the imported article for 
the time being. But if it be an article which the laborers 
of that country can produce to advantage, the tariff will 
have the effect of creating an increased demand for labor, 
and thus, by raising the price of labor in all branches of 
industry, it will enable the people of the country generally 
to buy the article more easily than before, even at the 
advanced price. 

LIMITS WITHIN WHICH PROTECTION IS POSSIBLE. 

And here, I think, we have a hint at the limits within 
which protection by way of tariff can be good statesmanship 
for any country. Protection for its own sake, and with a 
mere vague notion of doing good somehow, is but an idle 
fancy of a not very clear brain. 

A protective tariff on what cannot be produced is almost 
a contradiction in terms. But a tariff with a view to pro- 
tect what can be produced only at great disadvantage, will 
be an unnecessary tax upon the industry of the surrounding 
country ; for the reason that it takes so much more labor to 
produce the article in the one country than in the other. 

But the test is the amount of labor — not the wages, or the 
cost of the labor. 



PROTECTION AND ITS USES. 293 

Thus, for example, I suppose we might in this country 
construct square miles of hot-houses, and raise all the coffee 
we have occasion to use. But it would be a very costly 
process. It would require a very high tariff to protect that 
kind of industry. And it would be very bad policy ; for 
although it would diversify industry and raise the wages of 
the laborer, it would nevertheless be an unremunerative tax 
upon the industry of the country. It would be, to a large 
extent, money thrown away. It would take, perhaps, ten 
times as much labor to build hot-houses and raise the coffee 
as it would to earn the money and pay for the article at the 
price at which it could be imported, and hence, if I am right 
in estimating the proportion, about nine-tenths of the labor 
of raising the coffee at home would be a total loss to the 
world ; the men who were engaged in performing the work 
might as well have been idle nine-tenths of the time, or nine 
out of ten of them idle all the time, as to have engaged in 
making the preparations for raising coffee under such great 
disadvantages of natural position. 

list's doctrine. 

Mr. List, in his work on National Political Economy^ has 
shown, as it seems to me, that there are three stages in a 
nation's history, in reference to the policy of protection. In 
the first stage, when the people are but few, capital scarce, 
and land plenty, protection cannot effect any good result. A 
tariff merely taxes the people to no purpose. But, as soon 
as the people become more numerous, and capital has begun 
to accumulate, they will need to diversify their industry, by 
the introduction of manufactures, and for this, most likely, 
some well adjusted scheme of protective duties will be nec- 
essary. This constitutes the second stage. The third occurs, 
when the nation has become so rich, so densely populated, 
that there remains no new form of industry to be domesti- 
cated, and no fear of evil from competition with other 



294 PROTECTION AND ITS USES. 

nations. In this stage, a protective tariff will be a mere 
dead letter. There will be but little importation of what 
the nation can produce, and there can be no importation 
that will lower the price of commodities, whether we regard 
those imported, or those of domestic production. In the 
first stage, therefore, protection is unavailing, and a damage. 
In the second, it is effective and beneficial. But in the 
third, it is unavailing and useless, a mere dead letter on the 
statute books. 

The fact, however, that a protective tariff raises the money 
price of the protected article at first, and for a time is only a 
'prima facie objection to such a tariff, at most. 

PROTECTION AND NATIONAL INDEPENDENCE. 

The general reasons for protection may be arranged under 
three heads. 

1. No nation can be independent of another that does 
not produce all that it needs for consumption. Give any 
nation, however small, the exclusive power to manufacture 
gun-powder, and you will make that nation the mistress of 
the world. The same is true, though to a less extent, of 
every other article, that is, as is felt to be a necessity of life. 

It is sometimes said that this would be a means of keep- 
ing nations at peace. And doubtless so it would, to some 
extent. It would not, however, be the peace of equality 
and right; but the peace rather that comes from the uncom- 
plaining, unresisting submission of the weaker to the 
stronger., / 

DIVERSIFICATION OF INDUSTRY. 

2. The second fact is, that no community can be thrifty 
without a diversification of labor; and, as a general rule, 
the greater the diversification of labor, the greater the 
number of productive employments, the more nearly do we 
reach the condition of the greatest thrift, namely, the great- 
est industry of the greatest number. 

Thus, if all the people of a country are agriculturists. 



PROTECTION AND ITS USES. 295 

agricultural labor and agricultural products will be very- 
cheap in their money value, and all other things will be very 
dear in their labor value, however cheap in theii* money 
value. Hence the laborers will be able to buy but little, 
however much they may have to sell. 

If then a nation be so situated, that a protective tariff is 
necessary as a means of introducing manufactures, or any 
new form of productive labor which it is desirable to have, 
there can be no doubt of the wisdom of such a measure, 
provided, the new form of industry is one that is so well 
adapted to the people and the country, that when once in- 
troduced, it can be carried on with profit, and without con- 
tinued protection. 

FREE TRADE REDUCES THE WAGES OF THE LABORERS. 

3. The other is the fact that free trade between nations 
will sooner or later bring the price of labor — wages — to the 
same level l^he world over, and that level will be the lowest 
figure to which tyranny and misgovemment can reduce the 
laborers anywhere. 

Equality in sHU, machinery, and other facilities for man- 
ufacture, are so nearly within the reach of all nations, that 
we may consider them equal everywhere. The facilities for 
transportation are so great, that the cost of transportation 
has become an exceedingly small per cent, in the cost of all 
the most valuable articles we produce. 

Hence with free trade we bring all, the most valuable 
articles into competition in the one great commercial center 
of the world. The producers of the raw materials, wher- 
ever they are, must bear the cost of transportation thither, 
and if they are consumers too, they must bear the cost of 
transportation of whatever they consume, back from the 
place of manufacture to themselves. And he who can hire 
labor the cheapest, can of course, other things being equal, 
make himself the commercial centre and drive all other 
competitors out of the market, and thus control the market 
of the world. 



CHAPTER XVII. 

8PEECH OF HON. GEORGE McDUFFIE, 

OF SOUTH CAROLINA, 

In the Senate, January 29, 1844. 



THE senator from Maine [Evans], by a course of reason- 
ing which, if it can be comprehended at all, is cer- 
tainly not inductive, holds the reverse of all these doctrines- 
In one part of his argument, he maintains that it is better 
to pay a high price for manufactures made at home than a 
low price for those made abroad, though these latter are 
necessarily obtained in exchange for productions made at 
home. In another part, he maintains the yet bolder posi- 
tion, that a high rate of duties upon imports diminishes 
their prices, and a low rate enhances them! These are 
certainly most admirable illustrations of Lord Bacon's 
method of investigating the great truths of philosophy! 

I propose now, sir, to analyze the arguments by which the 
Senator reaches these wonderful results in political economy. 
In the first place, he says that when we impose a duty upon 
foreign imports, — of cotton manufactures for example — the 
effect of that duty is to reduce the price of the foreign man- 
ufacture abroad, thus throwing back the burdens of our 
taxation upon the people of foreign countries! Indeed, sir, 
if this theory can be made good by the inductive or any 
other process of reasoning, it will be one of the greatest 
discoveries ever made by any financier, ancient or modern. 

(296) 



THE TARIFF — M'DUFFIE. 297 

What a comfortable thing it would be to make other nations 
supply our Treasury! But there is one consideration calcu- 
lated to diminish the value of this discovery, which I would 
suggest to the honorable senator. This, unfortunately, is a 
game at which two can play, and in which the motto of 
both parties would be, "the hardest fend off." And we 
should find, in the end, as they say somewhere, that "the 
longest pole would knock down the persimmon." 

But to speak gravely, Mr. President, if nations really 
possessed this power of mutually taxing each other, it would 
prove to be the greatest curse ever inflicted upon mankind. 
It would totally overthrow that system of responsibility so 
wisely ordained by a wise Providence for preserving the 
harmony of nations. It would revive, in another form, the 
financial system of barbarous and conquering nations, who 
supplied their exchequers by rapine and plunder; and nations 
would sink (like the Roman empire) under the weight of 
their own corruptions. But, sir, I think I can reheve the 
Senate from all apprehension of these terrible disasters, by 
exposing the fallacy of this new theory of taxation. And 
the senator from Maine has, himself, furnished me with the 
means of doing it. For, by another of those strange coin- 
cidences for which his speech is remarkable, immediately 
after stating that a duty imposed upon imported cotton 
manufactures would reduce the price in England and throw 
the burden upon the foreign producers, he held up a com- 
pendium of British statistics, showing that the whole amount 
of cotton manufactures annually made in that kingdom was, 
in value, $260,000,000 of which only $10,000,000 are ex- 
ported to the United States, while the remaining $250,000,. 
000 are consumed in .Great Britain and other foreign 
countries. Now, is it not apparent that the price of cotton 
manufactures in Great Britain is regulated and fixed by the 
aggregate demand of the whole world, including the home 
demand, and that the miserable bagatelle of $10,000,000, 
13- 



298 THE TARIFF — ^M'DUFFIE. 

exported to this country, could not reduce their price in that 
country more than one or two per cent, if it were entirely 
cut off ? Sir, there never was a more baseless vision than 
this theory of the Senator from Maine; and I thank God 
that nations do not possess this power of mutual taxation. 
If they did, it would speedily end in the utter destruction 
of all foreign commerce, and a fearful retrograde in the 
march of civilization. It being obvious, then, that the 
burden of taxes imposed by this government must fall upon 
our own people, let us trace the operation of an import duty 
through its several transitions, and see where it ultimately 
rests. It is paid, in the first instance, by the importing 
merchant; but, as he is free to import or not, as his interest 
dictates, he would instantly cease to import if he could not 
indemnify himself for the duty he pays by a corresponding 
increase in the price of the articles on which it is paid. 
After resting upon him for a time, the duty advanced with 
its accumulated interest, are transferred to the retail mer- 
chant, who in like manner transfers them to the consumer, 
or domestic purchaser, where they finally rest. Now, sir, I 
care not whether you consider the consumer or the domestic 
producer as bearing the burden of protective duties. In 
either case, the result is substantially the same. The class 
of imports upon which these duties are imposed, are exclu- 
sively paid for by the productions of the exporting States, 
and must, therefore, be regarded -as the annual income of 
those States. And although they do not consume the whole 
of these precise imports, they consume an aggregate amount 
of imports and protected manufactures equally enhanced in 
price by the import duties, considerably larger than the 
whole amount of these imports. For besides our exports, 
we sell to the manufacturers cotton to the annual amount 
of eight or ten millions of dollars, for which they pay us 
almost exclusively in protected manufactures. 

But the Senator asks, with apparent anxiety, if you add 



THE TARIFF — M'DUFFIE. 299 

$40,000,000 to the annual amount of the imports obtained 
for your exports, where are you to find consumers? Now, 
let me tell him that he need give himself no concern on this 
subject. There never was a people who had the means of 
paying for any amount of imports, however large — consist- 
ing of every variety of commodities which administer 'to the 
wants and comforts of all classes — who could not find a 
way to consume them. The people of the exporting States 
L e the natural consumers of the whole of those manu- 
factures received in exchange for their exports, precisely 
for a reason so often alluded to by the Senator; and that is, 
that they have the means of pajdng for them. How often 
has he said, ''give the people the means of consuming for- 
eign imports " — admitting that the power of consumption 
was limited only by the means. Now, sir, the people of the 
exporting States, while they disdain to ask this government 
to give them the means of consuming foreign imports, or 
anything else, have a right to demand, and they do demand, 
that you permit them to enjoy the fruits of their own honest 
industry, and release them from that infamous system of 
legislative plunder, by which their means of consumption 
are unrighteously taken from them, and transferred to the 
people of more favored regions. And I tell the Senator 
from Maine that they can not only consume the whole of 
those imports which are purchased by the productions of 
their industry, but that they can do so with the proud con- 
sciousness that what they consume is emphatically their own, 
derived from no unjust and iniquitous monopoly, but from 
the blessing of God upon their own lawful industry. 

If the great staples of the South and West were equally 
diffused over the North and East, and the manufactures of . 
the latter, in like manner, diffused over the former, do you 
suppose this system would stand for a single year ? I do 
not believe it would command ten votes in this body. Or, 



300 THE TARIFF — M'DUFFIE. 

consider this whole country, with its now conflicting inter- 
ests, as an estate belonging to a single proprietor. Would 
these interests stand in conflict any longer? Would such a 
proprietor have the consummate folly to cut off the imports 
of foreign manufactures from one branch of his estate, that 
he might supply their place, at an increased cost of forty 
per cent., by another branch? Sir, it is vain to disguise the 
fact that it is because the interests of the United States are 
not homogeneous, that this protective system has grown up 
to its present gigantic stature. If the interests of the 
people, like the government, were a unit, and the question 
was, how to produce the greatest aggregate income for the 
whole, not a man could be found so absurd as to propose 
the exclusion of foreign manufactures because they are 
cheap, and substitute domestic manufactures at higher 
prices, as a means of increasing the national income. 

But, Mr. President, to bring all these views to a practical 
test, and to demonstrate the gross and revolting inequality 
and injustice of this protective system, I will suppose that 
the Union were now peaceably dissolved, and that three 
separate confederacies were formed — one consisting of the 
Middle and Eastern States, another of the Western and 
Northwestern States, and the third of the Southern and 
Southwestern States^denominated respectively the manu- 
facturing, the farming, and the planting confederacies. 
Each of these would, of course, be remitted to its original 
and inherent right of self-government, and divested of all 
power to control or influence the legislation of the others. 
Now, I propose to inquire what would be the obvious policy 
of each of these confederacies on the great questions of free- 
trade and protection, and how the interests of each, con- 
sidering the subject merely with a view to national wealth, 
would be affected by the political change I have supposed. 
And I will first draw a faithful picture of the condition of 
the southern and southwestern confederacy under the new 



301 



order of things and hold it up to the view of the Senate in 
contrast with its present condition, and ask the advocates of 
the protective policy to "look at this picture, and look at 
that," and say whether it is not "Hyperion to a Satyr." 

Judging from our past experience, it would be within 
limits to assume that the exports of the planting confederacy 
would amount annually to at least a hundred millions of 
dollars under that system of free-trade which would, of 
coui'se, be adopted; and in return for this there would be an 
annual amount of imports equal to one hundred and twenty 
millions of dollars; for we should sell as much and buy as 
much as possible, having no dread of a balance of trade in 
our favor; in other words, of receiving more value than we 
gave. A duty of ten per cent, on these imports would yield 
an annual revenue of $12,000,000 — a most abundant supply 
for all the imaginable wants of the government; which 
would not only be raised with one-fourth part of the burden 
now imposed upon our people, but the whole of it would be 
expended among them; whereas, of the enormous contribu- 
tions now drawn from the productions of our industry, 
scarcely anything is returned to us in the shape of disburse- 
ments. Now, sir, I have made a statement, with all the 
truth and unadorned simphcity of history, of what every 
man must know would be the policy pursued by the Southern 
and Southwestern States under a separate government, and 
of the results of that .policy as it would affect their wealth 
and prosperity. And yet, sir, that statement, in which 1 
defy any senator to point out the slightest coloring or 
exaggeration, discloses to every mind, capable of compre- 
hending it, the elements and causes of one of the most 
extraordinary revolutions in the prosperity of States to be 
found in the history of the world, whether proceeding from 
change of government, commercial discoveries, or any other 
cause. Sir, no imagination can adequately portray the 
increased prosperity of the States in question, in all its 



302 



developments. Their annual income — the annual amount of 
consumable commodities which they would receive as the 
reward of their industry, to be distributed among all classes, 
would be increased from $72,000,000 to $108,000,000, or in 
that proportion — to say nothing of the employment and 
means of enjojmient which would result from the disburse- 
ment of the revenue. The cities of Charleston, Savannah, 
and New Orleans, in some of which it may be said that the 
grass now grows in the streets, would rise from their ruins 
as if by enchantment, and rival the best days of New York 
and Philadelphia. And more than all, sir, the spirit of the 
people, broken down by the steady and progressive decay of 
their fortunes, would rise with renovated energy amidst the 
animating spectacle of a general and progressive prosperity. 
But the crowning glory of this great change would be, that 
it was produced without the possible imputation of injustice 
inflicted upon others, and simply from being restored to our 
natural right to enjoy the fruits of our own industry. 

Let us now trace the operation of this political change 
upon the prosperity of the manufacturing confederacy of 
the Middle and Eastern States. The manufacturers now 
receive an annual bounty of about $50,000,000 from the 
combined system of revenue and protective duties, laid 
mainly upon that branch of imports which would now belong 
to a separate and independent confederacy. Of this they 
would of course be deprived. The whole protective system 
would be at an end. Their new government would have no 
means to protect them, and they would need no protection. 
For how unnecessary and absurd would it be to impose high 
duties upon foreign manufactures where there would be 
nothing in the country with which to pay for them. They 
would not come in, therefore, if you would open your ports 
and proclaim free-trade. 

The difficulty would be no longer in excluding foreign 
fcnanufactures, but in obtaining a market for their own. 



303 



And where would tliey find that market? In the planting 
confederacy? They would now have to contend against the 
foreign manufacturers in that market, not only without a pro- 
tection of forty, or even twenty per cent., but without any 
protection at all. It would be our right and our duty to 
impose the same revenue duties upon their manufactures that 
we should impose upon those of other countries; thus receiv- 
ing a fair revenue of ten per cent, from manufactures on 
which we now pay a bounty of forty. And w^here would 
this manufacturing confederacy find sources of revenue? 
If their domestic exports may be fairly assumed as the 
measure of their imports, these would hardly reach twenty 
millions. And a duty of even forty per cent, would yield a 
very inadequate revenue, if compared with that of their 
southern neighbor. The result would probably be, that half 
their revenue would have to be raised by internal taxes, 
repugnant as these are to the notions of the Senator from 
Maine; and they would probably be imposed in the shape of 
excise duties upon those very manufactures which would be 
deprived of the protection of a forty per cent, duty, which 
they now enjoy. But, sir, I have not yet finished the 
gloomy portraiture of the manufacturing confederacy, as it 
would be under the new order of things. The states which 
would compose that confederacy now receive the greater 
portion (probably nine-tenths) of the enormous disburse- 
ments of this wasteful and extravagant government. 

This is no small matter, sirj few of the most enlightened 
statesmen and political economists ever realized its impor- 
tance, till the close of the twenty years' war which grew out 
of the French Revolution. During that w^ar, the financial 
resources of Great Britain seemed as miraculous as the 
military achievements of Napoleon. With an annual expen- 
diture of 8500,000,000 for several years, of which $300,- 
000,000 was raised by taxation, the people seemed to be, and 
actually were, for the time, eminently prosperous^ But at 



301 THE TARIFF — M'DUFFIE. 

the close of the war, when these vast disbursements com- 
paratively ceased, general depression and distress followed, 
instead of increased prosperity anticipated. The extraordi- 
nary influence of government disbursements at home, in 
raising the prices of commodities and labor, and in stimulat- 
ing industry, was then, for the first time, fully disclosed. 
And it was the opinion of able writers and statesmen, that, 
during the war, the disbursement of $500,000,000 annually 
in Great Britain, derived from loans and taxes, very nearly 
indemnified the people for the current burden of taxation. 
But this was neither more nor less than the people of the 
day living upon the resources of posterity — the one bloated 
with artificial prosperity, the other doomed to perpetual and 
oppressive burdens. And now, sir, to apply this example to 
the case before us, how perfectly do the manufacturing States 
now represent the people of Great Britain during the war, 
and the exporting States their prosperity? Under the 
political change I have supposed, all the present disburse- 
ments w^ould, of course, be withdrawn from the States which 
now receive them. 

I have thus, sir, presented a statement of the results which 
would take place in the manufacturing confederacy, with the 
same sort of historical fidelity which I endeavored to observe 
in the statements I made relative to the planting confederacy. 
I have stated nothing speculative; but, on the contrary, 
results which must take place. And I now leave it to the 
manufacturers themselves to decide whether this plain state- 
ment does not also disclose the elements and causes of a rev- 
olution in their prosperity fully equal to, but in dismal con- 
trast with, that which I have shown would take place among 
the planting States. How often have they told us that the 
protection derived merely from a revenue tariff would be 
totally inadequate to protect them from total ruin; and that 
we had as well apply the torch to their manufactories as to 
reduce the duties upon imports to that standard ? If these 



THE TARIFF M'DUPFIE. 305 



were not false clamors what a scene of desolation would be 
produced by depriving them of all protection, and leaving 
them, like the producers of the staples of exportation, to 
seek out markets abroad, where they must encounter the 
equal-handed competition of the whole world! 

Such, Mr. President, would be the opposite and striking 
results produced among the planting and the manufacturing 
States by the political change I have supposed; while the 
Western and Northwestern States would find a vastly 
extended market in the planting States for all the productions 
of their farms, obtaining high prices and cheap manufactures 
instead of the low prices they now obtain, and the high prices 
they are now compelled to pay to sustain the monopolies of 
the protective system. Now, sir, I earnestly ask the ques- 
tion. What is it, in the new order of things I have supposed, 
that would produce such extraordinary and opposite effects 
in the planting and manufacturing confederacies ? If, after 
ten years from the establishment of these separate confeder- 
acies a stranger should revisit the country, who had seen it 
before, he would naturally inquire what had produced the 
mighty changes that would everywhere meet his eye. In 
the South and Southwest, seeing our cities thronged with a 
vastly increased and prosperous population; the silence of 
our streets succeeded by the animating hum of active indus- 
try, and the whole country covered with tasteful and well- 
furnished mansions, where venerable ruins of log cabins had 
stood before, — he would exclaim, " What god has descended 
to bless this favored region, or what countries have been 
plundered to produce these monuments of wealth and pros- 
perity where all was decay and poverty before ? " He 
would be almost incredulous when informed that all this had 
resulted exclusively from the restoration of these States to 
the right of self-government, and their citizens to their 
natural rights. The same stranger, beholding the fallen and 
ruinous condition of the manufacturing States, would natur- 



306 



ally ask, '' What monstrous despotism, what oppressive bur. 
dens of taxation have destroyed the prosperity which, ten 
years ago, distinguished these States from all their associates ? " 
He would probably be still more incredulous when informed 
^'that all the changes he saw had been produced by prevent- 
ing those States from taxing, as they had done for twenty 
years, the productive industry of their southern and western 
associates." 

Now, Mr. President, if I have not grossly exaggerated the 
comparative effects which would be produced upon the man- 
ufacturing and other States of the Union, by simply restor- 
ing them to the right of regulating their own several inter- 
ests, how enormous must be burdens imposed upon the 
exporting States by the tributary vassalage to which they 
have been for twenty years reduced by the protective policy ? 
I have presented this plain and practical view of the subject, 
in the hope of making palpable to the view of our oppressors 
themselves the injustice they are perpetrating. And I warn 
them that there is a point beyond which oppression will 
not be endured, even by the vilest slaves or the most loyal 
citizens. 



CHAPTER XVIII. 

THE TARIFF. 

By Hon. Justin S. Mokrill of Yermont, 

In the Senate of the United States, Dec. 8, 1881, on the Bill to 
establish a Tariff Commission. 



MR. PRESIDENT: I have brought this subject to the 
early attention of the Senate because if early legis- 
lative action on the tariff is to be had, obviously the measure 
proposed by Senator Eaton and passed at the last session of 
the Senate is a wise and indispensable preliminary which 
cannot be started too soon. The essential information needed 
concerns important interests, vast in number and overspread- 
ing every nook and corner of our country; and when made 
available by the ingathering and collocation of all the related 
facts, will secure the earliest attention of Congress, as well 
as the trust and confidence of the country, and save the 
appropriate committees of both Houses weeks and months 
of irksome labors — possibly save them also from some 
blunders and from final defeat. 

An enlargement of the free list, essential reductions, and 
readjustments of rates, are to be fully considered, and some 
errors of conflicting codifications corrected. 

If a general revision of the Bible seems to have been 
called for, it is hardly to be wondered at that some revision 
of our revenue laws should be invited. But changes in the 
frame-w^ork of a law that has had more of stability than any 
other of its kind in our history, and from which an unexam- 

(30T) 



308 THE TARIFF — MORRILL. 

pled growth of varied industries has risen up, should be 
made with much circumspection, after deliberate considera- 
tion, by just and friendly hands, and not by ill-informed and 
reckless revolutionists. "When our recent great army was 
disbanded war taxes were also largely dismissed, and we 
have now, and certainly shall have hereafter, no unlimited 
margin for slashing experiments. 

We can expect no further examples of receipts exceeding 
the estimates by nearly $100,000,000, nor expenditures fall- 
ing short $200,000,000. Such violent waves, coming either 
to fill or to empty the Treasury, are no longer to occur. Our 
normal condition, modified by national growth, must be 
resumed. We are to consider how much, if any, of internal 
revenue can be relinquished, and next where and how the 
tariif can be safely and wisely revised, so as to leave it prop- 
erly productive, and in harmony with all interests, preserv- 
ing the proper equilibrium among the different branches of 
trade and just to every section of the country. 

The amount of revenue required must be determined, and 
the requirement for ordinary expenses, for interest on the 
public debt, and for pensions, as well as for some enlarge- 
ment of our Lilliputian Navy and the decent equipment of 
our military fortifications, is still so great that extreme pro- 
tection is not so much the question as that of revenue; and 
with barely moderate discrimination in favor of American 
fields and work-shops, not leaving them in danger of unfair 
foreign competition, little more, it is believed, will be found 
necessary. If, however, there must anywhere be rusty 
plows, blown out furnaces, idle looms, unemployed men, 
and ragged tramps, then let the Old World retain these 
wretched evidences of hard times as long as a protective 
tariff will exclude them from our shores. 

I have some remarks to make upon the general subject of 
the tariff, and prefer not to postpone them until the subject 
will necessarily be encumbered with details in their nature 



THE TARIFF MORRILL. 309 

subordinate. It is not my habit to discuss the tariff upon 
every question before the Senate, and I shall, therefore, 
make no apology, it being properly before us, for asking 
indulgence to give it some consideration, especially now, in 
the early and comparatively unappropriated time of the 
Senate. 

In speaking to-day I cannot avoid the use of language 
which will show that I am proud of our country and of its 
people, of its public spirit and industrial energy; but I do 
not claim to be singular. All hearts here are wedded to 
American institutions, and these, as we believe, are destined 
to historic immortality. 

I shall also speak of Great Britain; not with any hate, but 
in the words of Holmes, " Our little motherland — God bless 
her I " for how much is there in the grandeur of her life of 
centuries, her literature and laws that challenges unstinted 
admiration. But it is enough that her ways are not our 
ways; enough that she imposes the laws upon her own peo. 
pie; and when she straddles across the Atlantic and intru- 
sively seeks to impose her free-trade shackles upon the 
United States, I claim the right to protest against it with as 
much of plain and homely emphasis as I may be able to com- 
mand. Pardon me if I repel with some warmth the idea 
that America is ever to be exhibited as one of the fettered 
captives of a far-fetched and ill-planted "Cobden Club." 
Not that I do not appreciate the great merits of Mr. Cobden 
as an eminent Englishman; but his principles of free trade 
are no more entitled to American homage than his principles 
of monarchy. 

No suspicion of partisanship can adhere to me if I do not 
outrun the fulminations against free trade of the late Demo- 
cratic candidate for the Presidency; and I am confident that 
a "tariff for revenue only" does not excite in me more 
intense disgust than in the Democratic vice-presidential can- 
didate for 1876, who vigorously supports in the North 



310 THE TARIFF MORRILL. 

American Revieio the measure for a tariff commission. ''All 
parties," said General Hancock, ''agree that the best way for 
us to raise revenue is largely by the tariff. So far as we are 
concerned, therefore, all talk about 'free trade' is a folly." 
Now that is quite in the line of what / propose to say. 

Governor Hendricks, while treating the " plate-glass poli- 
tics " of Southern Indiana with magnificent disdain, exhibits 
no want of sense at least when he writes that " Congress 
cannot look to revenue only, but must exercise judgment and 
discretion, and that in the exercise thereof regard must be 
had to the interest and welfare of each particular object of 
taxation, and to its comparative importance in the country. 
The rates cannot be uniform. A horizontal tariff is impos- 
sible." 

These sentiments are not those of men in their dotage, but 
of live men, possibly not yet wholly retired from all political 
service, and on these questions they must be enrolled as 
acceptable political backers. 

In considering the questions before us — questions, in the 
words of Dr. Johnson, where " the greatest powers of the 
understanding are applied to the greatest number of facts " — 
I regret that my ability is so unequal to their importance, 
and while I hope to advance my opinions with that modesty 
which is always decent, I must admit that they are opinions 
not suddenly formed, but such as are based on principles 
which have come down to us from our fathers undimmed by 
laps^ of time, and which appear to me as the head-lights of 
a prosperous country now having but one heart and fifty 
million proprietors. 

ALL TAXATION UNATTRACTIVE. 

Perhaps there is no subject of equal importance more con- 
stantly before legislators than the various and complex sys- 
tems of taxation upon which all civilized governments depend 
for enduring support, and none less attractive or so unhkely 



THE TARIFF — MORRILL. 311 

to be patiently and laboriously investigated by the majority 
of those whose duty it may be to revise this joyless class of 
statutes. The subject affords play neither to sudden wit nor 
to loitering imagination, but from first to last tires every- 
body with a wilderness of statistics, frigid facts, and debata- 
ble problems. 

The imposition of even necessary taxes upon those through 
wliose favor we derive all our legislative authority is not 
fascinating work, and to some it appears so likely to obscure 
professed love for the people, or so threatening to official 
longevity, that they prefer a defensive record adverse to all 
taxation. They would not imperil congressional honors by 
taxing such necessaries of life as tobacco and whisky, and 
they denounce the wrong which does not leave them both 
free to every head of a family, and to ah who may declare 
their intention to become the head of a family. These 
tender friends have no idea of subjecting tender-footed 
constituents to any burden beyond that of regular and eager 
support at the polls, and they lean to an alliance with those 
who maintain the good time coming, when the word not 
i^hall be expunged in the next revision from all the com- 
mandments; when holidays shall be equally rewarded with 
working days ; when mines and quarries shall spontaneously 
open where fortunes can be had without digging ; when 
paper money, hitched to undiscoverable gold, shall be 
created by the fiat of the government, and be distributed 
every morning like manna to hungry Hebrews ; when not 
only those who are lazy can be lazier still, but when all 
monopoly and ownership of property shall cease, and every 
one have or be the donkey he covets. 

But in our country common sense and common schools 
and the common people are more than a match for any 
school of demagogues. It is satisfactory to feel that we 
may here safely appeal, not in vain^ to the broad interests of 
a broad land, to the knowledge and virtue which should 



312 THE TARIFF — MORRILL. 

guide statesmen, and to the example of illustrious men, 
whose lasting glory it will ever be that they bound together 
the people of a continent with a coherence that is fixed and 
invincible. 

Not to have confidence in Congress would be to impeach 
our own institutions as well as to adopt the sneers and doubts 
of hereditary enemies, who have been wont to include 
Americans among those whom 

No king could govern, and no god could please. 

In the end, therefore, 1 am glad to believe, we shall reach 
the conclusions of a great people, who, looking to their 
enduring honor^ as well as to their present and prospective 
interests, will cling to such salutary measures as have already 
contributed so greatly to our growth and character, rather 
than to borrowed expedients, rejected abroad, and unnatural 
not less everywhere in the New World than to our own 
people. 

THE UNITED STATES PAYS ITS PUBLIC DEBTS. 

The policy among ancient nationalities was to accumulate 
large sums in reserve for conquest or defense. Then, when 
war arose, no new taxes were imposed, but money was paid 
out so plenteously that every home industry was animated 
and made more profitable. We may deplore the fact that 
the victors often plundered and even enslaved the conquered ; 
yet the financial economy which provided in advance for 
great emergencies must be commended, and it presents a 
striking contrast to the poHcy of leading nations in modern 
times, which seems to be to create colossal national debts, to 
mortgage future revenues, and pledge the honor of posterity 
to be responsible for both the necessities and unbounded 
prodigalities of their ancestors. 

Under such circumstances even the ordinary burdens, 
national and local, cheerfully borne in time of peace and 
prosperity, begin to chafe, and those added by reason of 



THE TARIFF MORRILL. 313 

exceptional necessities are often looked upon with little 
composure, and even desperate resolutions are sometimes 
formed to summarily shake them off. The honor of making 
perpetual pecuniary sacrifices for one's country is nowhere 
too eagerly courted. New ways to pay old debts, of cunning 
shifts for their avoidance, are often welcomed with greater 
satisfaction, and it is sometimes found that these shameless 
expedients secure favor even among those who in private 
life would scorn to make a promise that could be left 
unredeemed. 

A public debt increases the cost of living, and the obliga- 
tion to pay often loses vitality and becomes decrepit with 
age. The early gradual extinguishment of our public debt 
therefore appears to me as essential to the preservation of 
our moral character as to our thrift. An intelligent people 
should be inspired with the hope of ultimate deliverance 
from debt ; and while for such great objects the heaviest 
war taxes are no longer expedient, nor required, enough 
must remain to show that our debt-paying policy is deep- 
rooted and unalterable. 

Abundant as our revenue now seems to be, it is not much 
more than equal to what has been relinquished since the 
war. In 1866 the receipts were $558,032,620.06, or nearly 
double that of Great Britain during that supreme exigency 
which terminated at Waterloo. Other nations may have 
reached the grinding limits of taxation, but so far as our 
country is concerned, with no ambition beyond the victories 
of peace, should a crisis occur calling for a fighting nation, 
we have unstrained resources to put two million or more of 
gallant men in the field, with no fear of a lack of support 
or adequate reward. 

While extricating ourselves from public debt, and from 

all its inhering perplexities, as rapidly as we may, we are 

bound to make the burdens to be borne as light and equal 

as possible. A large national debt is not only a bond to 

14 



314 THE TARIFF — MORRILL. 

keep the peace at any price, but it is an advertised lack of 
national energy, whicli sometimes encourages bald preten- 
sions, or invites aggressions from those who would other- 
wise be likely to treat us with their " most distinguished 
consideration." 

We intend to keep the peace, but cannot consent to speak 
with "bated breath," nor to be financially handcuffed. It 
was the inferiority of neighboring and debt-laden states, as 
mucb as their German cousinship, which invited their 
recent absorption by Prussia. Nor can we forget that the 
last of the Napoleons once thought the United States ripe 
for spoliation. The broken-down credit of Turkey keeps 
the beaks and claws of all Europe uplifted to tear her prov- 
inces asunder. France has seized Tunis, and while holding 
the African wolf by the ears, waits to avenge Sedan by the 
recovery of Alsace and Lorraine. England with hands too 
full to indisputably grip all she now claims, covets Egypt. 
Austria, defeated in Italy, would be mistress of the lower 
Danube, and Russia sullenly awaits the inevitable hour for 
Constantinople. The United States, however, seeks neither 
colonial satellites nor territorial conquests. Contented with 
the past, we await without fear the possibilities of all coming 
centuries. 

It must be admitted that a great public debt is not merely 
a source of weakness, perpetuating grievous taxation, but 
its influence is anti -republican. It largely increases execu- 
tive patronage by bringing forth an unusual force of tax- 
gatherers, as well as a hateful brood of informers. 

Though public debts are often justified by the gravity of 
the occasion which gave them birth, it is too evident that, 
'per se, they are not public blessings. If President Jackson 
had thought otherwise, he would not in 1835 have announced 
in such exultant tones that '^ all the remains of the public 
debt have been redeemed." Our population then did not 
reach fifteen millions, and the hero of New Orleans was 



THE TARIFF MORRILL. 315 

proud of the fact that twenty-five million dollars of public 
debt had been extinguished in three years ! A generation 
has passed away and another has succeeded, and we have 
paid off in a single year more tha^ four times as much as 
was paid' when the country was liberated and electrified by 
the feat of 1835. 

Since the era of President Jackson, our population has 
more than trebled, and the wealth of the nation is many, 
many times greater ; but the future President who may have 
the eminent fortune to announce to the American people 
that " all tho remains of the public debt have been redeemed " 
will mark an epoch, and such a day will be once more cele- 
brated as a national jubilee.* 

The future of our country, its public spirit and frugality, 
should not hereafter be less distinguished than in the past ; 
and the American pohcy, payment of the public debt, uni- 
versal education, no great standing army, and the retention 
of so much of the tariff a*^ will furnish ample revenue and 
secure to labor both employment and adequate reward, will 
continue to illustrate our career, and be regarded not only 
with patriotic affection by our own people, but with rapture 
by many people less fortunate. 

FREE TRADE NOT THE CREED OF OUR FATHERS. 

Among the original States of tho Union, the most pros- 
perous and most advanced in manufactures, as well as all 
others, gave up their power to regulate trade and commerce 
to the General Government ; but with the deep conviction 
that their most important interests would receive greater 
protection, and with no .fear that they would then or ever be 
neglected or trampled under foot. Madison, in the First 

* " This month of January, 1835," said Mr. Benton, at the Washington banquet, 
" in the fifty-eighth year of the Republic, Andrew Jackson being President, the 
national debt is paid, and the apparition, so long unseen on earth, a great nation 
without a national debt, stands revealed to the astonished vision of a wondering 
world." 



316 THE TARIFF — MORRILL. 

Congress, said sucli a neglect would be a fraud on the States 
and on the people. What inducements, let me ask, would 
citizens have had to pay taxes, fight battles, if after all they 
were to have no other protection than that accorded to 
foreigners subject to no tax and to no service ? If State 
laws regulating trade and commerce were superseded; States 
ripe for manufactures felt more sure of being fully and 
efficiently guarded by the broad shield of the Union. The 
arms they laid down were laid down to be placed in equally 
friendly but stronger hands. Invisible local boundaries 
were to give place to ramparts planted on national frontiers. 
Free trade was to be opened to coequal sister States, and to 
sister States only, but assuredly not to be opened to peoples 
bearing no part of our public burdens- least of all, not to 
be opened to foreign rivals, nor to foes from whom we had 
heroically just won our independence. No national govern- 
ment then practiced or advertised the policy of free trade, 
and one only now pretends to any faith in that much- 
battered creed, and that one appears nothing loath to re- 
nounce it whenever and wherever adherence fails to promote 
her interests. 

States having a deficient population, with limited manu- 
factures and remote from markets, most require protection. 
By no other means can their growth and prosperity be so 
surely advanced. It is manufactures in their infancy, in 
States hardly starting in diversified occupations, which need 
creative stimulus. This was understood and declared by the 
framers of our Constitution, and reiterated, without dis- 
cordant notes, for many years after the adoption of that 
instrument. The first petition to Congress, coming from 
Maryland, asked for protection to manufactures, and the 
next, from Virginia, asked for protection to salt, and sub- 
sequently to other articles. The preamble to the first reve 
nue act set forth that it was "for the discharge of the debts 
of the United States and encouragement and protection of 



THE TARIFF — MORRILL. 317 

manufactures." The Congress of 1789 was not ashamed to 
avow its policy, and did not hide it in incidentals nor in 
judicious euphemisms. 

OUR EARLIEST STATESMEN ALL FOR PROTECTION. 

Hamilton, after Burke, the profoundest statesman of his 
age, while Secretary of the Treasury under President Wash- 
ington, "brought forth his masterly reports, which for politi- 
cal wisdom and administrative ability wiU be consulted and 
quoted as authority as long as our Republic endures. His 
arguments for establishing public credit, for funding the 
public debt, and that favoring the imposition of duties on 
imports for the protection of domestic manufactures, were 
unanswerable then and unanswerable they remain, and hav- 
ing been so considered, were reprinted, many years after the 
tragical death of the author, by a Democratic Congress as 
the work of a gifted statesman, lifted far above the plane of 
merely political controversy. 

Jefferson, in his "Notes on Virginia," had expressed some 
views adverse to the establishment of manufactures, but 
subsequently his views underwent a radical change, and, 
besides employing twenty of his slaves in making nails, he 
also became a practical manufacturer to the extent of run- 
ning one carding machine, two spinning jennies, and a loom 
with a flying shuttle. In 1816 he writes: " Experience has 
taught me that manufactures are now as necessary to our 
independence as to our comfort." 

The pohcy of protection was adhered to by Adams and 
Jefferson. There was little dissent, apparently, from any 
quarter, and the leading argument in support of the tariff 
of 1816, must be credited to Mr. Calhoun, who, almost for 
the first time, then exhibited his remarkable logical resources 
in debate. It was supposed that future wars with England 
were probable, possibly inevitable, and absolute independence 
in peace or war was to be broadly and resolutely asserted. 



318 THE TARIFF — MORRILL. 

President Monroe, by precept and example, was almost a 
fanatic as to tlie policy of encouraging American manu- 
factures. Soon after lie was inaugurated, lie made, in 1817, 
Ms extensive tour through the Northern and Eastern States, 
from the Atlantic to Detroit, clad in Hue homespun and a 
cocked hat. He was met by crowds of people at every 
town, and he not only thoroughly inspected our naval 
depots, arsenals, and fortifications, but he was equally in- 
quisitive in regard to our very humble but growing manu- 
facturing establishments; and one very small one, then just 
starting, for the manufacture of copperas, in my. native 
town, he traveled much out of his way to visit in Vermont, 
which enabled me, a mere child, by going on foot two miles 
and a half on a rainy day, to see the man of whom Jeffer- 
son said that '' if his soul were turned inside out, not a spot 
would be found on it." 

General Jackson was a member of the Senate, and voted 
for the tariff of 1824. From one of his letters, written in 
the same spirit with which he had earlier, when a boy- 
prisoner, refused to black the boots of a British officer, I 
copy the following words: 

" Upon the success of our manufactures as the handmaid 
of agriculture and commerce, depends, in a great measure, 
the independence of our country; and I assure you that none 
.can feel more sensibly than I do the necessity of encour- 
aging them." 

There is no authority upon the interpretation of the Con- 
stitution standing above that of James Madison, justly called 
the "Father of the Constitution." His letter to Professor 
Davis, so late as 1833, after referring with approbation to a 
recent tariff speech by Mr. Webster, at Pittsburgh, presents 
elaborate and impregnable arguments in behalf of protection, 
and in that remarkably cogent and lucid style which adorned 
all the writings of this peerless statesman. Might not this 
able, patriotic, and unselfish Virginian have said, as sadly 



THE TARIFF^MORRILL. 319 

as Bacon, " I leave my name and memory to foreign nations, 
and to mine own countrymen, after some time is passed 
over " ? 

Later we have endured seasons of instability, but our 
nearest approaches to free trade have been seasons of 
national disaster, strewn with the wrecks of general ruin, 
as were the years '37, '47, and '57; and the further we have 
receded from free trade, the better has labor fared and the 
greater has been the material and, I do not hesitate to say, 
the educational advancement of the country. Free trade 
with foreign nations affords no buoyancy to life at home, 
but, like a patent hfe-preserver wrongly adjusted, would put 
our heads under water and heels uppermost. 

Henry Clay, personally, long the best beloved public man 
in the United States, was most distinguished as the bold 
leader of protection to home industries, and might more 
than once, perhaps, have been elected to the Presidency, 
but for his stiff utterance, his" rather to be right than be 
President," and his moderate opinions upon slavery and 
Texas annexation. When, among other States, Missouri 
was CEurried for him in 1824, Mr. Benton was a most promi- 
nent supporter, and, upon the ground, as stated by him, 
"that the most efficient protector of American iron, lead, 
hemp, wool, and cotton, would be the triumphant champion 
of the new tariff." Mr. Benton, however, soon bowed to 
other gods; and Mr. Clay, in 1844, was beaten by Mr. Polk 
on the Texas issue, and also by having his protective gar- 
ments suddenly stolen from him by Mr. Polk, who came 
out at the last moment in favor of " fair protection to our 
agriculture, manufactiires, and commerce." At the decease 
of Mr. Clay, Mr. Brenckinridge, a life-long political adver- 
sary, but a knightly neighbor, declared in his eloquent 
eulogy: 

" If I were to write his epitaph, I would inscribe as the 
highest eulogy on the stone which shall mark his resting- 



320 THE TARIFF — MORRILL. 

place, ' Here lies a man who was in the public service for 
fifty years, and never attempted to deceive his countrymen.' " 

Kentucky is a noble State, of ample proportions, peopled 
by a gallant race, and is entitled to great credit for the pure- 
blooded stock — the Durhams and Lexingtons — of her 
blue-grass regions, with large disputable claims for the 
quantity and quality of her pure Bourbon products; but 
the home of Henry Clay ought to have led our people in 
the activities of material development, interweaving all 
the prosperity evolved by various skilled industries; and, 
though Kentucky has not been a leader in the early part of 
the race, it may be confidently expected she will yet save 
herself on the " home- stretch." Georgia and South Caro- 
lina, losing no time in belated hosannas to State-rights 
idolatries, seem alive to that statesmanship which brings 
them to the front of growing prosperity; and mainly be< 
cause these elder sister States with great energy, appear 
now to have practically accepted Henry Clay's masculine 
policy of " entire independence of all foreign States as re- 
spects our essential wants." The whole country owes end- 
less gratitude to the great Kentucky statesman, the splendor 
of whose oratory may be forgotton and -his compromises 
forgiven, but whose early patriotic advocacy of American 
industries and their protection, will forever cause his mem- 
ory to be decorated with fresh fiowers culled by the hands 
of labor in every State. 

Among turfmen- — and the ministers of Great Britain 
have rarely been strangers to the sports of the turf — the 
well-known rule of handicapping for differences of age, or 
sex, and for recorded speed in previous races is recognized 
and inflexibly demanded. No free-trade axioms are tol- 
erated at the Derby, but younger colts and fillies are pro- 
tected by a stringent tariff of weights against greater age 
and against prior records of speed. All the racers of Eng- 
land have had this protection increased at every successive 



THE TARIFF MORRILL. 321 

race against the Amencan Parole and Iroquois. If, then, 
horses may with stern propriety be protected against any 
odds, why may not men? If it would have been wrong to 
allow Parole to carry off all prizes with no increase of 
weight to be successively borne, it would be equally wrong 
to permit younger and less experienced nations in manu- 
factures to submit to and be distanced by those long pos- 
sessed of foremost advantages and the previous winners in 
many contested fields. And yet the owners of Manchester 
and Birmingham five-year-olds hold that a match with 
Atlanta and Indianapolis, two-year-olds, is equal, just, and 
scientific, and refuse to be comforted whenever they are 
fairly handicapped by protective tariffs. 

Rather vain of our Anglo-Saxon origin, as we aU willingly 
admit ourselves to be, we are also prone to think much of 
English blood in the brute creation. Accordingly will it be 
denied that a few of our most erudite and highest bred 
American newspaper editors, who have adopted as a science 
the eccentric free-trade dogma of Great Britain, appear to 
have a strange fa^ncy for an English bull-dog at their front 
doors to bark at everything American which passes by, and 
were those who follow the teachings of Jefferson and Clay, 
of Jackson and Webster, to be passing, would they not have 
to jump out of their tracks or find the teeth of these un- 
American dogs in the calves of their legs ? 

But whenever these editors, otherwise excellent, come to 
thoroughly explore their free-trade dogma, they will find it 
like all other commercial rules and regulations, solely a mat- 
ter of expediency, destitute of even a protoplasm of exact 
science, and then it may be expected that these barking 
sentinels will no longer be useful even in the most vociferous 
partisan warfare. 

THE TARIFF OF 1861. 

The tariff act of 1861, which, by a nick-name given by 
baffled opponents as an echo to a name so humble as my 
14* 



322 THE TARIFF — MORRILL. 

own, it was perhaps hoped to render odious, was yet 
approved by a Democratic President, and gave to Mr. Bu- 
chanan a much-needed opportunity to perform at last one 
official act approved by the people. 

If I refer to this measure it will not be egotistically, nor 
to shirk responsibility, but only in defense of those who 
aided its passage — such as the never-to-be-forgotten Henry 
Winter Davis, Thad. Stevens, and WiUiam A. Howard, and, 
let me add, the names of Fessenden and Crittenden — and, 
without the parhamentary skill of one [Mr. Sherman] now 
a member of this body, its success would not have been 
made certain. 

And yet this so-called '' Morrill tariff," hooted at as a 
^' Chinese wall " that was to shut out both commerce and 
revenue, notwithstanding amendments subsequently piled 
and patched upon it at overy fresh demand during the war, 
but retaining its vertebrae and all of its specific characteris- 
tics, has been as a financial measure an unprecedented suc- 
cess in spite of its supposed patronymical incumbrance. 
Transforming ad valorem duties into specific, then aver- 
aging but 25 per cent, upon the invoice values, imposing 
much higher rates upon luxuries than upon necessaries, and 
introducing compound duties* upon woolens, justly com- 
pensatory for the duties on wool, it has secured all the reve- 
nue anticipated, or $198,159,676 in 1881 against $53,187,- 
511 in 1860, and our total trade, exports and imports in 
1860, of $687,192,176, appears to have expanded in 1880 to 
$1,613,770,633, with a grand excess of exports in our favor 
of $167,683,912, and an excess in 1881 of $259,726,254, 
while it was $20,040,062 against us in 1860. A great 
reduction of the public debt has followed, and the interest 
charged has fallen from $143,781,591 in 1807 to about $60,- 
500,000 at the present time. 

If such a result is not a practical demonstration of healthy 

* The Dominion of Canada has since imposed duties upon a large number of 

articles. 



THE TARIFF MORRILL. 323 

intrinsic merits, when both revenue and commerce increase 
in much greater ratio than population, what is it ? Our 
imports in the past two years have been further brilliantly 
embellished by $167,060,041 of gold and silver coin and 
bullion, while retaining in addition all of our own immense 
domestic productions ; and it was this only which enabled us 
to resume and to maintain specie payments. Let the con- 
trast of 1860 be also borne in mind, when the excess of our 
exports of gold and silver was $57,996,004. 

As a protective measure this tariff, with all its additional 
amendments, has proven more satisfactory to the people and 
to various industries of the country than any other on record. 
The juiy of the country has so recorded its verdict. Agri- 
culture has made immense strides forward. The recent 
exports of food products, though never larger, is not equal 
by twenty-fold to home consumption, and prices are every- 
where more remunerative, agricultural products being higher 
and manufactures lower. Of wheat, corn, and oats, there 
was produced 1,184,540,849 bushels in 1860, but in 1880 
the crop had swelled to 2,622,200,039 bushels, or had much 
more than doubled. Since 1860 lands in many of the 
"Western States have risen from 100 to 175 per cent. The 
production of rice, during the same time, rose from 11,000,- 
000 pounds to 117,000,000 pounds. The fires of the tall 
chimneys have everywhere been lighted up; and while we 
made only 987,559 tons of pig-iron in- 1860, in 1880 we 
made 4,295,414 tons; and of railroad iron the increase was 
from 235,107 tons to 1,461,837 tons. In twenty years the 
production of salt rose from 12,717,200 bushels to 29,800,- 
298 bushels. No previous crop of cotton equaled the 4,- 
861,000 bales of 1860; but the crop of 1880 was larger, and 
that of 1881 is reported at 6,606,000 bales. The yield of, 
cotton from 1865 to 1881 shows an increase over the fifteen 
years, from 1845 to 1861, of 14,029,000 bales, or almost an 
average gain of a million bales a year. 



324 



THE TARIFF — MORRILL. 



The giant water-wheels have revolved raore briskly, show- 
ing the manufacture of 1,797,000 bales of cotton in 1880 
against only 979,000 bales in 1860, and this brought up the 
price of raw cotton to higher figures than in 1860. Thir- 
teen States and one Territory produced cotton, but its man- 
ufacture spreads over thirty States and one Territory. The 
census of cotton manufactures shows: 



Capital invested, 

Number of operatives. 

Wages paid, 

Value of productions, . 



I860. 



$98,585,269 

122,028 

$23,940,108 

115,681,774 



$208,880,346 

175,187 

$41,921,106 

192,773,960 



It will be found that a larger amount of capital has been 
invested in cotton mills than in woolen, and that the increase 
of productions has been large and healthy, a very hand- 
some proportion of which is to be credited to Southern 
States. Goods of many descriptions have also been cheap- 
ened in price. Standard prints or calicos which sold in 
1860 for nine and one-half cents per yard now sell for six 
and one-half cents. 

The census returns of woolen manufactures show the 
following astonishing results: 



I860. 



Males employed, 

Females employed, 

Capital invested, 

Wages paid, . 

Value of raw material consumed, . 

Value of annual product, 

Importations of woolens, 

Annual production of wool, pounds 



74,367 


24,841 


65,261 


16,519 


$159,091,869 


$30,862,654 


47,115,614 


9,808,254 


162,609,436 


36,586,887 


265,684,796 


61,895,217 


33,613,897 


37,876,945 


264,500,000 


60,511,343 



It thus appears, that while the number of hands employed 



THE TARIFF — MORRILL. 325 

is three times and a half larger than in 1860, the wages 
paid is about five times larger and the capital is five times 
greater. The annual productions have been more than 
quadrupled, and the aggregate importations have fallen off 
over four millions. With these results in our front, pro- 
tection on wool and woolens will be likely to withstand the 
hand-grenades of all free-trade besiegers. 

In New England and some other States sheep husbandry 
has fallen off, and in some places it has been replaced by the 
dairy business; but in other States the wool-clip has largely 
increased, especially has the weight of the fleece increased. 
The number of sheep has increased about 80 per cent., and 
the weight of wool over 400 per cent. The discovery that 
the fine long merino wools, known as the American merino, 
are in fact the best of combing wools and now used in many 
styles of dress-goods has added greatly to their demand and 
value. Many kinds of woolen goods can be had at a less 
price than twenty years ago. Cashmerets that then brought 
forty-six cents per yard brought only thirty-eight and one- 
fourth cents in 1880, and muslin de laines dropped from 
twenty cents to fifteen, showing that the tariff did not make 
them dearer, but that American competition caused a reduc- 
tion of prices. 

The length of our railroads has been trebled, rising from 
31,185 miles in 1860 to 94,000 miles in 1881, and possibly 
to one-half of all in the world. For commercial purposes 
the wide area of our country has been compressed within 
narrow limits, and transportation in time and expense, from 
New York to Kansas, or from Chicago to Baltimore, is now 
less formidable than it was from Albany or Pittsburgh to 
Philadelphia prior to the era of railroads. The most distant 
States reach the same markets, and are no longer neighbors - 
in-law, but sister States. The cost of eastern or western 
bound freight is less than one-third of former rates. Work- 
ingmen, including every ship-load of emigrants, have found 



326 THE TARIFF — MORRILL. 

acceptable employment. Our aggregate wealth in 1860 was 
$19,089,156,289, but is estimated to have advanced in 1880 
to over forty billions. Further examination will show that 
the United States are steadily increasing in wealth, and in- 
creasing, too, much more rapidly than free-trade England, 
notwithstanding all her early advantages of practical expe- 
rience and her supremacy in accumulated capital. The in- 
crease of wealth in France is twice as rapid as in England, 
but in the United States it is more rapid than even in France. 

These are monumental facts, and they can no more be 
blinked out of sight than the Alleghanies or the Rocky 
Mountains. They belong to our country, and sufficiently 
illustrate its progress and vindicate the tariff of 1861. If 
the facts cannot be denied, the argument remains irrefutable. 
If royal ''cowboys" who attempted to whistle down Ameri- 
can independence one hundred years ago ingloriously failed, 
so it may be hoped will fail royal trumpeters of free trade 
who seem to take sides against the United States in all com- 
mercial contests for industrial independence. 

Among the branches of manufactures absolutely waked 
into life by the tariff of 1861, and which then had no place 
above zero, may be named crockery and china ware. The 
number of white-ware factories is now fifty-three, with forty 
decorating establishments; and the products, amounting to 
several millions, are sold at prices twenty-five to fifty per 
cent, below the prevaihng prices of twenty years ago. Clay 
and kaolin equal to the best in China have been found East, 
"West, and South in such abundance as to promise a large 
extension of American enterprise, not only in the ordinary 
but in the highest branches of ceramic art. Steel may also 
here claim its birth. No more of all sorts than 11,838 tons 
were made in 1860, but 1,397,015 tons were made in 1880. 
Those who objected to a duty on steel, have found that they 
were biting something more than a file. Silks in 1860, 
hardly unwound from the cocoon, were creeping along with 



THE TARIFF — MORRILL. 327 

a small showing of sewing silk and a few trimmings, but 
now this industry rises to national importance, furnishing 
apt employment to many thousand women as well as to men, 
and the annual products, sharply competing with even the 
Bonnet silks of Lyons, amount to the round sum of $34,- 
500,000. Notwithstanding the exceptionally heavy duties, 
I am assured that silk goods in general are sold for twenty- 
five per cent, less than they were twenty years ago. 

Plate glass is another notable manufacture, requiring great 
scientific and mechanical skill and large capital, whose origin 
bears date since the tariff of 1861. It is made in Missouri 
and in Indiana, and to a small extent in Kentucky and 
Massachusetts; but in Indiana it is made of the purest and 
best quality by an establishment which, after surmounting 
many perils, has now few equals in the magnitude or per- 
fection of its productions, whether on this or the other side 
of the Atlantic, and richly merits not only the favor but the 
patronage of the Government itself. Copper is another 
industry upon which a specific duty was imposed in 1861, 
which has had a rapid growth, and now makes a large con- 
tribution to our mineral wealth, The amount produced in 
1860 was less than one-fifth the present production, and 
valued at $2,288,182; while in 1880, the production rose to 
the value of $8,849,961. The capital invested increased 
from $8,525,500, to $31,675,096. In 1860, the United 
States Mint paid from twenty -three and one-half to twenty- 
five cents per pound for copper; but has obtained it the 
present year under a protective tariff as low as seventeen 
cents. Like our mines of inexhaustible coal and iron, 
copper is found in many States, some of it superior to any 
in the world, and for special uses is constantly sought after 
by foreign governments. 

Many American productions sustain the character they 
have won by being the best in the world. Our carpenters 
and joiners could not be hired to handle any other than 



328 THE TARIFF — MORRILL. 

American tools; and there are no foreign agricultural imple- 
trients, from a spade to a reaper, that an American farmer 
would accept as a gift. There is no saddlery hardware, nor 
house-furnishing, equal in quality and style to American. 
"Watches and jewelry and the electro gold and silver plated 
ware of American workmanship as to quality have the 
foremost place in the marts of the world. The superiority 
of our staple cotton goods is indisputable, as is proven by 
the tribute of frequent counterfeits displayed abroad. The 
city of Philadelphia alone makes many better carpets and 
more in quantity than the whole of Great Britain. These 
are noble achievements, which should neither be obscured 
nor lost by the sinister handling and industrious vituperation 
of free-trade monographists. 

The vast array of important and useful inventions 
recorded in our Patent Office, and in use the world over, 
shows that it is hardly arrogance for us to accept the com- 
pliment of Mr. Cobden, and claim that the natural mechani- 
cal genius of average Americans will soon appear as much 
superior to that of Englishmen as was that of Englishmen 
one hundred years ago to that of the Dutch. 

THE TARIFF SHIELDED US IN 1873. 

If we had been under the banner of free trade in 1873, 
when the wide-spread financial storm struck our sails, what 
would have been our fate? Is it not apparent that our 
people would have been stranded on a lee shore, and that 
the general over-production and excess of unsold merchan- 
dise everywhere abroad would have come without hindrance, 
with the swiftness of the winds, to find a market here at 
any price ? As it was, the gloom and suffering here were 
very great, but American workingmen found some shelter 
in their home markets, and their recovery from the shock 
was much earlier assured than that of those who in addition 



THE TARIFF MORRILL. 329 

to their own calamities had also to bear the pressure of the 
hard times of other naiions. 

In six years, ending June 30, 1881, our exports of 
merchandise exceeded imports by over $1,175,000,000 — a 
large sum in itself, largely increasing our stock of gold, 
filling the pockets of the people with more than two hundred 
and fifty millions not found in the Treasury or banks, making 
the return to specie payments easy, and arresting the painful 
drain of interest so long paid abroad. It is also a very con- 
clusive refutation of the wild free-trade chimeras that exports 
are dependent upon imports, and that comparatively high 
duties are invariably less productive of revenue than low 
duties. The pertinent question arises, shall we not in the main 
hold fast to the blessings we have ? As Americans we must 
reject free trade. To use some words of Burke upon another 
subject: '^ If it be a panacea we do not want it. We know the 
consequences of unnecessary physic. If it be a plague, it is 
such a plague that the precautions of the most severe quar- 
antine ought to be established against it." 

FEEE-TRADE PEOSPERITY ON THE WANE. 

It gives me no pleasure to notice retrograde steps in 
the prosperity of Great Britain; and if some evidence of 
this sort is brought out, like that of the five thousand houses 
now marked <'To let" in Sheffield, and ten thousand in Bir- 
mingham, it will have no other purpose than to show that 
free trade has failed to secure the promised supremacy to 
Enghsh manufactures. The avowal of Mr. G-ladstone that 
the additional penny to the income tax produces less revenue 
than formerly, indicates a positive decrease of wealth; and 
the steady diminution of British exports since 1873, amount- 
ing in 1880 to one hundred and sixty million dollars, with a 
diminution m the total of exports and imports of two hun- 
dred and fifty million dollars, is more conclusive proof as well 
of British decadence as of the advancement of other nations. 



330 THE TARIFF — MORRILL. 

COMMERCIAL PROTECTION. 

The sum of our annual support bestowed upon the Navy, 
like that bestowed upon the Army, may be too close-fisted 
and disproportionate to our extended ocean boundaries, and 
to the value of American commerce afloat; yet whatever 
has been granted has been designed almost exclusively for 
the protection of our foreign commerce, and amounts in the 
aggregate to untold millions. Manufacturers do not com- 
plain that this is a needless and excessive favor to importers; 
and why, then, "should importers object to some protection 
to a much larger amount of capital, and to far greater num- 
bers embarked certainly in an equally laudable enterprise at 
home? 



CHAPTER XIX 

THE ESTABLISHMENT OF PROTECTION IN THE 
UNITED STATES.* 

By Prof. "W. G. Sumnee, 
Yale Collei2:e. 



IN my last lecture I sketched the origin of the protective 
system in this country. I now proceed to describe its 
growth and establishment. This was brought about by 
incidents connected with the Napoleonic wars. The wars of 
the French revolution, and those which followed, produced 
great effects upon the trade of the civilized world. The 
United States, as the chief neutral carrier, saw its shipping 
multiplied and its mercantile interests enriched. The bellig- 
erents, in their struggles to injure each other, endeavored to 
put a stop to this neutral traffic, and inflicted great injury 
on the neutral who was carrying it on. Nevertheless, the 
profits were so great that the Americans continued it, in 
spite of losses. When war broke out again in 1803, the 
indignation here at the collisions which took place was so 
great, that measures of resistance and retaliation were 
sought. The f ederahsts wanted to put the country in a state 
of defense and build a navy to protect commerce. They 
represented the Northeastern States and the shipping inter- 
ests. The administration, however, with the great majority 
from the Middle and Southern States, demanded a navy, 
sought to reduce expenditures, and turned its attention to 



History of Protection in the United States, Lecture IV, 

(33 i) 



332 PROTECTION IN U. S. — SUMNER. 

measures of coercion by commercial war. These measures 
had been tried with sad results during the Revolution. Mr. 
Madison had urged discriminating duties in the first tariff 
as a means of forcing foreign nations to grant reciprocity, 
and he had urged coercive and retaliatory measures of that 
kind during Washington's administration when hostilities in 
Europe first broke out. It is astonishing what faith was 
entertained in such measures. You see it still strong in the 
South when the civil war broke out, when it was believed 
that withholding cotton would force European nations to 
intervene. 

In 1805 an act was passed for prohibiting the importation 
of English manufactures in order to force England to give 
up impressment, and in order to support Pinckney and 
Monroe in their efforts to make a treaty. In 1806 England 
blockaded the northern coast of Europe from Brest to the 
Elbe. Napoleon retaliated by the Berlin decree. In the 
next year England replied by the orders in council ; Napo- 
leon rejoined by the Milan decree, and England returned 
once more by more stringent prohibitions. The tenor of 
these decrees on the one side and on the other was to 
prohibit neutrals from trading with the enemy, or to put 
such trade under heavy restraints. Napoleon was trying to 
shut the continent against English manufactures, and Eng- 
land was trying to keep out of the continent provisions 
and colonial supplies. Between the two, neutral commerce 
suffered the greatest loss and vexation. The American 
shipowners complained and called on their government for 
protection. The measure adopted was the embargo of 1807, 
by which the shipowners were protected against foreign 
aggressors by being shut up at home. They had before 
incurred heavy risks, now their own government imposed 
certain ruin. It was necessary to pass one act after another, 
making the embargo more stringent and tyrannical in order 
to check evasions of it. It was repealed in a little over a 



PROTECTION IN U. S. — SUMNER. 333 

year, but non -intercourse and non-importation acts were 
substituted for it until war grew out of it in 1812. 

"We are concerned with this commercial war here, not on 
account of its folly or imbecility, although it well represents 
the folly of all restriction, but on account of its connec- 
tion with the strand of history which we are following. 
Embargo, non-intercourse, and war, lasting from 1807 to 
1815, created an entirely artificial state of things here, or, 
perhaps 1 should say, the United States was drawn into the 
distortion and perversion of industry and commerce which 
the great wars were producing in Europe. Manufactories 
of various kinds sprang up here to supply the. wants of the 
people when cut off from the usual sources of supply by 
foreign exchange. They produced articles of inferior quality 
or design, generally speaking, but people had to be satisfied 
with them. In many cases also the products were dearer 
than those normally obtainable abroad. They were sustained 
by the artificial difficulties in foreign exchange, and by the 
diminished profits of other industries which would have been 
?nore profitable here. In 1810, Gallatin, Secretary of the 
Treasury, made a report in which he stated that manufac- 
tures of wood and leather, amongst other things, were 
exported beyond the imports, that the following industries 
were "firmly established," iron and manufactures of iron, 
manufactures of cotton, wool, and flax, paper, printing types, 
books, several manufactures of hemp, and a few others. In 
that year (1810) some effort was made to get more protection 
through duties, but nothing came of it. The same effort 
played some share in bringing about the war, which was a 
product of intrigue, and as needless as it was fruitless. One 
of the first war measures' was to double all duties and pro- 
hibit the import of English products. During the war the 
prices of manufactured articles were very high. Manufac- 
turers made great profits and factories were built in large 
numbers. In 1814 all the banks suspended specie payments, 



334 PROTECTION IN U. S. — SUMNER. 

and tlien followed a reckless paper-money period whicti has 
never been equaled since. Prices rose liigher than ever, 
and here we have again an illustration of the observation 
previously made that our currency and tariff errors have 
been intertwined throughout our history. 

Observe now the outcome of all this for the matter of our 
investigation. Embargo and war had created a false and 
artificial state of things in which much capital had been 
invested in manufactures, and '< industry " had been " encour- 
aged." Under the false hght in which they were viewed, 
embargo and war, therefore, seemed to be beneficial forces. 
The return of peace, if it reopened trade and let things 
return to their normal condition, would be a calamity. It 
was necessary to secure a continuance of the circumstances - 
which had brought these industries into existence, in order 
to secure them from destruction. Such continuance could 
not be brought about without perpetuating for the great 
body of consumers the scarcity, loss, and distress of war, so 
far as war affected their power to procure and enjoy indus- 
trial products. This then is exactly what the tariff, which 
was adopted in 1816, did do. It saved a part of the capital 
involved in manufactures, although most of it was swept 
away in the financial crisis w^hich ensued in 1819, on the 
collapse of the paper system, but it burdened the nation with 
the same trammels which embargo and war had laid upon it. 

The act of May 3, 1815, repealed all discriminating duties 
and tonnage taxes in favor of any nation which should take 
similar action with regard to American vessels and cargoes. 
Here we have a fact of interest to the general history which 
we are pursuing. This was what was known as the " Ameri- 
can system," at this time. "We saw how, in the treaty with 
France in 1778, the Americans set out to gain general 
reciprocity. That came to be called the " American system," 
viz., general reciprocity instead of the old commercial treat- 
ies. Now the plan of laying countervailing duties to enforce 



PROTECTION IN U. S. SUMNER. 335 

reciprocity came to be called the ''American system," and 
was so called until 1824, when, by a still further perversion, 
that name was applied to the system of protective duties. 
Daniel "Webster, at that time, well said of it : ''This favorite 
American policy is what America has never tried ; and this 
odious foreign policy is what, as we are told, foreign states 
have never pursued." 

The act of February 5, 1816, continued the double war 
duties until July 1st, but the general tariff act was approved 
April 27, 1816. The tariff was not at this time, or for 
sixteen years after, a political question, but it is noteworthy 
that tariffs were passed in every presidential year until 1832, 
except in 1820. All parties agreed, however reluctantly, in 
passing the increased duties, for fear of alienating the votes 
of the protected interests. In 1820 a tariff was proposed, 
but failed, because Mr. Monroe was to be re-elected without 
'a contest. As yet, however, in 1816, the question was 
neither political nor sectional. New England generally 
opposed the tariff, but not universally. The South acceded 
to it for the sake of cotton. This article was then heavily 
taxed abroad, and some very cheap manufactures of it from 
China and India were largely imported. It was believed 
that the development of cotton manufactures here was the 
best way to make cotton culture lucrative. Lowndes of 
South Carolina reported the bill, and Calhoun made a 
speech in favor of it. It was based on a report by Dallas, 
Secretary of the Treasury, in which he divided the articles 
subject to duty into three classes: (1) those of which the 
home supply was adequate to the demand; (2) those of 
which the supply was partial; (3) those of which the supply 
was small or nothing," He proposed graduated duties on 
these three classes, the highest duty falling on the first class. 
You observe at once the incongruity. On the plan of fos- 
tering infant industries, duties would evidently be highest 
on articles producible but not produced, or only slightly 



336 PROTECTION IN U. S. — SUMNER. 

produced; but here we find the market closed when the sup- 
ply is adequate, and only a revenue tax laid on those articles 
which were least produced, and a medium tax on those 
which were in the heat of the struggle. It is the best pos- 
sible test of a theory to see whether it admits of two con- 
tradictory applications in practice, for between theory and 
practice there can be no inconsistency. If any appears, it 
is proof positive that either the theory or the practice needs 
revision and correction. To say that a thing is true in 
theory but bad in practice is a radical absurdity. Theory 
is the attempt of man to learn general principles for guid- 
ance in his practical tasks. Practice is the test of theory, 
and shows that the general principles have been either 
correctly or incorrectly apprehended. When, therefore, a 
theory admits of two opposite applications in practice, one 
of which fits it as well as the other, it proves conclusively 
that the theory embraces a contradiction, and we see why 
protection of infant industries never leads to their inde- 
pendence and to free trade. The advocates of protection 
use the first form of the theory to secure its adoption and 
the second to secure its perpetuation. 

Calhoun's chief argument for protection was the need of 
the proposed manufactures in case of war. This argument 
had considerable force at the end of a war in which foreign 
supplies had been cut off, but on the other hand, the exac- 
tions of the manufacturers during the war led many to 
resent any attempt now to favor them. 

The argument for protection to provide against the con- 
tingency of war has great popular weight. The policy and 
history of the United States since 1816, however, afford a 
striking commentary on it. We have always kept our 
army down a little below the point of efficiency. We have 
grudged the education of a few officers. We have reduced 
our navy so low that we hardly do our share in the police 
of the ocean. We pay little heed to our fortifications. Yet 



♦ PROTECTION IN U. S. SUMNER. 337 

we voluntarily expose ourselves to a loss far greater than 
the cost of any armament, out of obedience to this notion 
of providing for a possible war by industrial restraints. 
Our popular orators formerly made much capital by com- 
paring our expenditures for army, navy, and fortifications, 
with those of the old countries; but they said nothing of 
this industrial loss incurred to the same end. 

Fui'thermore, is it not a satire on this notion to remember 
that the only wars in which w^e have been engaged since 
1816, have been that with T^lexico and the civil war, in 
neither of which our cherished industrial independence was 
of any use to us ? 

I am not arguing for expenditures on armies and navies. 
Far from it. We are happy in not needing them. Any 
one who has to come three thousand miles to fight us will 
think well of it first. I only point out the grotesque con- 
trast between our preparations for war of the one kind and 
of the other. 

In fact, however, the independence which we seek must 
be sought in another direction. Independent men are 
those who have wealth, not those whose houses are stored 
for a siege. Independent nations are those which are 
wealthy, because they can command what they want when 
they want it. Those will be wealthiest which give industry 
its freest course in time of peace. 

The case of the South during the late war is a most 
striking proof of the fallacy of the "independence" doc- 
trine. The South had less of this artificial independence 
than any other country in the world. It was blockaded and 
inclosed by an immensely superior force, and what hap- 
pened? First, people found that when they had put their 
last stake on war, they could do without thousands of things 
which had seemed essential; second, they found substitutes 
and makeshifts to take the place of real essentials; third, 
they found that, so long as they had commodities to ex- 
15 



338 PROTECTION IN U. S. — SUMNER. 

change which the rest of the world wanted, no power could 
prevent the exchange from going on. It does not become 
those who needed four years to subdue the South to argue 
that it was weak for lack of industrial independence. In- 
deed^ the argument is incomplete in two or three important 
points. Suppose that the South had not been weakened by- 
slavery; suppose that it had been an independent nation 
before and had enjoyed free trade, so that its people had 
possessed all the wealth they might have accumulated ; sup- 
pose that' its enemy had been obliged to seek it over the 
ocean, and by sea attack only; on such a hjrpothesis who can 
believe that the South would have suffered because it had 
not "enjoyed protection," and who can urge us, on the 
chances of ever finding ourselves in the position of the 
South, to go on creating an artificial independence? Our 
independence lies in union, good government, and free 
industry. 

The tariff of 1816 was not carried against the instincts of 
the American people towards freedom without strong oppo- 
sition. The great majority adhered to the old Jeffersonian 
doctrines and policy. ^ They wanted to get rid of the army 
and navy, to reduce taxes and expenditures, to reduce the 
number of office-holders, and to ''let things alone." The 
prevailing argument was the interest of the existing invest- 
ments, which, of course, no one desired to destroy. It soon 
appeared, however, that the barrier of taxation was no 
equivalent for embargo and war. 

The retiirn of peace in Europe allowed industry and 
finance to return to the operations of natural laws and to 
escape from the constraints of twenty-five years of war. 
The shock was terrible, and it took ten years for its effects 
to subside. In 1816 the English exported immense quan- 
titles of manufactured goods to the Continent and to the 
United States. The results of these transactions were dis- 
astrous. Our paper money here also exercised its influence 



PROTECTION IN U. S. — SUMNER. 339 

to encourage overtrading and overimportation. In 1817 
the manufacturers were in distress. Cries were heard 
against the inundations of foreign goods, against the drain 
of specie and against the balance of trade. Evidently we 
cannot understand these things without taking into account 
the movements which were going on in the other industrial 
nations, hut tlie popular opinion here was that the Enghsh 
had set out, by a sacrifice of some millions' worth of goods, 
to destroy American manufactures. This behef had deep 
root and perhaps has only lately died out, since we have 
ceased to hear cries of " British gold " whenever any one 
spoke of free trade. The notion I have referred to received 
strong reinforcement from a remark of Brougham's which 
you may find quoted in the first popular protectionist work 
you choose to take up, in which he recommended his 
coimtrymen to reconquer the American market. If he 
meant to propose to them to sacrifice their capital in giving 
several millions' worth of goods to the Americans in order 
to destroy factories which would spring up again the moment 
fchey tried to reimburse themselves, they would have been 
the first to laugh at him. 

An eager effort, however, in favor of protection was now 
commenced, and it was kept up for fifteen years. It had 
an organ in Kiles' Register, the editor of which was a fanati- 
cal protectionist. He filled his paper, week after week, with 
essays, items, statistics, and arguments in favor of ''home 
industry." No such effort has ever been made on the other 
side, and I believe that one can understand the means by 
which the natural tendency of the American, people to free- 
dom, and their early bias that way, was perverted, only by 
observing, the zeal and industry with which protectionism 
was inculcated. 

The tariff of 1816 had provided for a gradual decline of 
the tax on cotton and woolen goods, and Congress had 
refused to include, as was desired, a prohibition of nan- 



340 PROTECTION IN U. S. SUMNER. 

keens, but the time at wliich the reduction on woolens and 
.cottons was to take place, was deferred until 1826, by an 
Act of April 20, 1818, and the duty on bar-iron was raised 
from nine to fifteen dollars per ton. 

The tariff of 1816 had also adopted the principle of the 
minimum on cotton cloth and cotton yarn, none of the for- 
mer being rated at less than twenty -five cents per square yard, 
whatever its cost at the place of exportation. This, of course, 
cut off the American people from any advantage by the 
great factory system of England, or from the introduction 
of machinery in England, so far as these improvements 
tended to cheapen cotton cloth. It ought to be added that 
the incorrect valuation of the pound sterling, the inaccuracy 
of the weights and measures used at this time, and the long 
credit given by the government for duties, to some extent 
neutralized the duties. 

In 1820 Mr. Baldwin of Pittsburgh introduced three bills, 
one for increased duties, one for taxes on auction sales, and 
one for cash payment of duties, which all failed to pass. In 
1822 and 1823 other bills were introduced for increasing 
duties, which failed to pass. It was not until the great 
presidential struggle of 1824 that another tariff crowned the 
seven years' struggle. Before taking that up I desire to 
present to you some of the chief doctrines which were 
believed and taught at this time, as we learn them from the 
Congressional debates and Niles' Register. 

It was argued that wages were not higher here than in 
England when properly measured. This was in answer to 
the free-trade argument as then put, that it was useless to 
try to develop manufactures here because of this disadvant- 
age. Of course, if it is true that wages are higher here, that 
would be the true inference. 

It was also agreed on behalf of protection, that protection 
and revenue were antagonistic to each other, and that the 
government ought to be supported by <' direct" taxation, 



PROTECTION Ix\ U. S. SUMNER. 341 

while duties on imports should be reserved entirely for pur- 
poses of protection. Niles published long articles in which 
he urged this view of the subject, and he brought forward 
many and strong considerations in favor of what he called 
direct taxation. He showed what the tariff really cost each 
consumer, he opposed a revenue from import duties as 
uncertain, and all this in favor of prohibitory duties for the 
purpose of protection. 

Another feature of the controversy was that the shipping 
interest was blamed in no measured terms for opposing pro- 
tection to manufactures. The growth of shipping was 
pointed out and traced back to the discriminating and tonnage 
duties of 1789, and the shipping interest was charged with 
selfishness in resisting the application of the same means to 
other industries. In this connection we meet with the best 
instance of the fallacy which inheres in the word " protec- 
tion " itself. In making up the account against the shipping 
interest for the protection which had been accorded to it, the 
war undertaken for its defense, but against its will, was 
charged to it, and also the entire expense of the navy. The 
navy "protected" the merchant ships from unlawful attacks 
or interference, that is, it gave them the security which it is 
the business of government to provide, and which is analo- 
gous to the oflQce of courts and police on land, but this pro- 
tection was made a basis of argument that the government 
ought to interfere likewise to "protect" producers against 
industrial competition. 

A similar 'charge of selfishness was brought against the 
cotton manufacturers of New England, who, after 1820, 
opposed any further protection. Their industry was firmly 
established and very remunerative, and they found that the 
effect of protection was simply to disturb their business by 
tempting great numbers into it, and by exposing it to great 
fluctuations. It was argued against them that the system 
ought to be extended to wool and iron, until they reached 



342 PROTECTION IN U. S. — SUMNER. 

the same point. This is logical and correct, but, as has often 
been shown, it reduces the system to an absurdity. After 
taxing the community to foster one industry, it is proposed 
to tax that one with others, to foster a second, then all the 
preceding to encourage a third. It follows that the first 
and second lose their advantage, and that the result is a 
series of weak fosterlings supported by weakened legitimate 
industries. 

The same criticism applies to any system of ''incidental 
protection." The claim is put in to widen the system and 
do "justice" by favoring all, which is impossible. The only 
real justice is to favor none. 

The great argument of this period, however, was "hard 
times." There was a commercial crisis in 1819, which has 
not, perhaps, been equaled since. The complaints were 
kept up for five years, although the only ground for them, 
if any, was the comparison with the flush times of specula- 
tion and paper money, and they were just such times of dis- 
tress as the whole commercial world was enduring. The 
complaints ceased when the'tarifp of 1824 was passed. 

Those who argued most strenuously on this ground found 
themselves putting propositions together which made a 
strange combination when compared. Thus: (1.) The United 
States is the richest country in the world in point of natural 
resources, and has only a sparse population. (2.) This 
favored country is in great distress. (3.) What it needs is 
more taxation to enable its people to get a living in it. 

We not unfrequently find arguments used during this 
period which show that the speakers or writers believed that 
a girl in a Manchester factory, who, with a loom, could pro- 
duce as much cloth as several men could make by hand in the 
same time, was therefore able to exchange her product for 
the product of the labor of that number of American farm- 
ers. Of course all the notions about the balance of trade, 
and draining specie, and making money scarce are met with 
continually. 



PROTECTION IN U. S. — SUMNER. 343 

The duties collected under tlie tariff of 1816, during the 
last three years of its operation, were equal to a rate of 30 
per cent, on dutiable imports. You see that there had been 
great progress since Hamilton's day. 

1 come now to the tariff of 1824. That act would not 
have been passed if it had not been for the political contest 
which was impending. Here we meet with the new factor of 
political intrigue, and also with those phenomena which 
arise from the extension and complexity of the system. 
This bill was dexterously combined to embrace strength 
enough to carry it. We also now find the South opposed to 
protection; as indeed she had been since 1820. The argu- 
ments employed were not new, but the issue was clearer and 
the debate was far better sustained from the free-trade side. 
We have an argument by Mr. Webster, in which several of 
the issues which continually arise in this controversy are 
handled in a masterly manner. He argued them on a plane 
entirely above the wretched patch-work of which the discus- 
sion otherwise consisted. I have already quoted his crush- 
ing criticism of the notion of protection as an ''American 
system," under the application of that title which now 
became current. He showed the advance of opinion on this 
matter abroad, and showed that we were taking on our 
young shoulders a load which the older nations would be 
glad to throw off if they were not clogged by so many vested 
interests. He also showed that the distress complained of , so 
far as it had existed in the last few years, had been due to 
currency troubles here and abroad, and gave a correct 
explanation, which few seemed able to understand, of the 
phenomena of the exchanges here in 1820 and 1821. In 
regard to the comparative rates of wages, he said: The 
chairman of the committee says "it would cost the nation 
nothing, as a nation, to make our ore into iron. Now I 
think it would cost us precisely that which we can worst 
afford; that is, great labor. We have been asked, in a tone 



344 PEOTECTION IN U. S.— ^SUMNER. 

of- some pathos, wliether we will allow to tlie serfs of Russia 
and Sweden tlie benefit of making our iron for us. Let me 
inform the gentleman that those same serfs do not earn more 
than seven cents a day, and that they work in these mines 
for that compensation because they are serfs. And. let me 
ask the gentleman further, whether we have any labor in 
this country that cannot be better employed than in a busi- 
ness which does not yield the laborer more than seven cents 
a day ? The true reason why it is not our policy to compel 
our citizens to manufacture our own iron is, that they are far 
better employed. It is an unproductive business, and they 
are not poor enough to be obliged to follow it. If we had 
more of poverty, more of misery and something of servitude; 
if we had an ignorant, idle, starving population, v/e might set 
up for iron makers against the world. The freight of iron has 
been afforded from Sweden to the United States as low as eight 
dollars per ton. This is not more than the price of fifty miles' 
land carriage. Stockholm, therefore, for the purpose of this 
argument, may be considered as within fifty miles of Phila- 
delphia. Now, it is at once a strong and just view of this 
case, to consider that there are, within fifty miles of our 
market, vast multitudes of persons who are willing to labor 
in the production of this article for us at the rate of seven 
cents per day, while we have no labor which will not com- 
mand, upon the average, at least five or six times that 
amount. The question is then. Shall we buy this article of 
these manufacturers and suffer our own labor to earn its 
greater reward, or shall we employ our own labor in a sim- 
ilar manufacture, and make up to it, by a tax on consumers, 
the loss which it must necessarily sustain ?" 

Unfortunately, Mr. Webster was bound by local interests 
to sustain the protection to shipping, and this wa,s fatal to 
his opposition. Massachusetts wanted protection on ships, 
but not on hemp or iron or molasses. A small Massachu- 
setts interest joined with Rhode Island and Connecticut in 



TROTECTION IN U. S. — SUMNER. 345 

favor of an increased tax on woolens, but not on wool. The 
tariff of 1816, it was said, had not sufficiently protected 
woolens, and had made the tax, such as it was, diminish at 
intervals. The English bounty on exported woolens was a 
damage which, it was claimed, ought to be counteracted. 
Observe the antagonism here established: England, pursu- 
ing the old restrictive system by these bounties, made a 
present to foreign nations at the expense of her own tax- 
payers. The foreign nations regarded this gift as an injury, 
and set u.p barriers against its acceptance, at the expense of 
their tax-payers. Could anything more conclusively con- 
demn the whole system? 

Then look at the internal conflict of interest. Kentucky 
wanted a tax on hemp to encourage her production, although 
her dew-rotted hemp was so inferior to the Russian water- 
rotted hemp that it never competed. She also wanted a tax 
on molasses to make rum dear in the interest of whisky. 
Louisiana wanted a tax on molasses for protection to her 
sugar planters. The Middle States and Ohio wanted pro- 
tection on raw wool; and Pennsylvania, of course, wanted 
protection on iron. In the conflict of interests New Eng- 
land was defeated, having less political power, and hemp, 
whisky, iron, and raw wool, uniting the Middle and West- 
ern States, carried the day. The minimum on cottons was 
raised to 30 cents. A minimum for woolens was established 
at 33^ cents, and the duty was put at 30 per cent, to be 
advanced to 33-J- per cent, in a year. Raw wool, costing 
less than 10 cents per pound, was to pay 15 per cent. Other 
wool was to pay 20 per cent, for a year, 25 per cent, the 
second year, and 30 per cent, afterwards. Bar-iron was 
raised to $18 per ton if forged, and stood at $30 if rolled. 
This was to off-set the cheapness of the new process chiefly 
used in England. 

This tariff passed the House by 107 to 102. New Eng- 
land gave fifteen votes for it, and twenty -three against it 
15* 



346 PROTECTION IN U. S. — SUMNER. 

The Sonthern and Southwestern States gave two vott.s for 
it. The duties collected under it were, on an average, equal 
to a rate of thirty-seven per cent. 

One expects now, in reading the contemporaneous records, 
to be rid of the subject for a time. The reader naturally 
says: ''The tariff has been raised; the protection has been 
granted. The question is disposed of." Nothing of this 
kind, however, took place. The high-tariff interest was by 
no means satisfied with the result, especially as regarded 
woolens. The agitation recommenced the next year, with a 
reiteration of the old arguments, condemnation of "our 
present ruinous system," and demand for protection, as if 
there had been no concessions in that direction. This calls 
our attention to certain features inherent in the protective 
system, and shows us how erroneous in practice, as well as 
in theory, is the notion that we can proceed through pro- 
tection to free trade. Protection nourishes dependence, not 
independence. It is a system in which all the parts hang 
together, and protection for some cannot be united with 
freedom for others. If one industry should be set out in 
free competition, while the rest were protected, it would be 
found that they are interdependent; that machinery, raw 
materials, and labor supplies would be so dear that the 
exposed industry would have no fair chance in competition 
with foreigners. Hence one long protected industry, if it 
became independent by natural causes, could not be left free 
unless the whole system were abandoned. But then the cry 
goes up from those nurslings of recent beginning, that they 
are not yet ready. If you defer the introduction of freedom 
for ten years longer on their account, a new company of 
infants is meantime brought into being, and the plea for 
further delay comes from them. Thus you go on forever, 
and the theory is reduced to an absurdity. 

During the period from 1824 to 1828 the political factor 
in the tariff controversy rose to chief importance. The 



PROTECTION IN U. S. — SUMNER. 347 

administration of J. Q. Adams was exposed to the most 
vigorous and relentless opposition from the party which had 
formed around Andrew Jackson. After the Democratic 
Convention of Harrisburg, in 1824, it was certain that 
Pennsylvania was enthusiastic for Jackson. The rural 
j)opulation of that State cared more for Jackson than for 
tariff. This was a fact which the politicians had simply to 
accept as a fact. The composition of the Jackson party, 
therefore, coincided to a certain extent with the coalition 
which had passed the tariff of ] 824. New England as the 
Adams section was, both politically and on the tariff, still 
more in a position to be neglected than it was in 1847. 
The South found its pohtical combinations and its tariff 
interests inconsistent. 

England still furnished a convenient and popular object 
of attack. She now showed her perfidy and desire to ruin 
.American manufactures by reducing her own duties on raw 
wool to one penny per pound. This enabled her manufac- 
turers to manufacture so cheaply as to pay our import duties 
and yet compete with success. According to the theory 
which we are studying, this was a serious reason for "pro- 
tecting " ourselves against the good this might have brought 
to us. The woolen manufacturers of Boston accordingly 
sent a petition to Congress in 1826 asking for more protec- 
tion. January 10, 1827, a bill was introduced for raising 
the duties on wool and woolens. It was tabled in the 
Senate by the casting vote of Calhoun. It was in the New 
England interest, and, as Niles said, politics were in the way. 

In July, 1827, a national convention met at Harrisburg, 
called by the Pennsylvania Society for the Promotion of 
Manufactures and Mechanic Acts to consider measures for 
promoting manufactures. It was the most energetic attempt 
ever made to organize and give symmetry to the protectionist 
movement. It adopted resolutions in favor of more protec- 
tion for iron, steel, glass, wool, woolens, and hemp. It pro- 



348 PROTECTION IN U. S. — SUMNER. 

posed a duty of 20 cents a pound on wool costing 8 cents 
or more, to advance 2-J- cents per annum until it should be 
50 cents. It adopted four minima for woolens, 50 cents, 
$2.50, $4.00, $6.00. The duty was to be 40 per cent, for a 
year, 45 per cent, the next year, and 50 per cent, afterwards. 

The committee on manufactures at the next session of 
Congress recommended that evidence should be taken as to 
the state of manufactures. This was a new departure, for 
hitherto all tariif legislation had been made blindly and 
ignorantly. The northern protectionists opposed the propo- 
sition ; the South favored and carried it. The evidence 
all went to show deplorable distress in all manufacturing 
industry, although the country generally was enjoying great 
prosperity. The argument necessarily was tangled and 
contradictory. It was urged, and really was the greatest 
popular argument, that the country owed its prosperity to 
the tariff, but here were the manufacturers claiming to be 
in distress. The truth was that the country possessed such 
means of producing wealth that the tariff could not crush 
them. Then again the distress was needed as an argument 
for more protection, but what light did it throw back on the 
previous attempts in that direction ? 

Many of the peculiar doctrines I have mentioned as 
advocated at an earlier period were now heard no longer, 
but a new one was brought forward and repeated again and 
again, viz. : That protection, by domestic competition, lowers 
prices. I have already, in my former lecture, discussed this 
doctrine. 

The new tariff bill was introduced in February, 1828. 
It was based upon the recommendations of the Harrisburg 
convention. Its central feature was wool and woolens. 
Hemp, iron, and molasses figured as before. It came for- 
ward, therefore, as a New England or Adams measure, and 
the Jackson coalition opposed it, but under the necessity of 
satisfying the Middle and Western States. The feeling in 



PROTECTION IN U. S.— SUMNER. 349 



the South was already very bitter about the tariff legislation, 
and this new effort to push on the system, reckless of South- 
ern protests, still further embittered the South. The West 
also took the position that they had as yet had nothing of 
this good, which it was assumed that the government had to 
distribute, and they demanded that, if the system was to go 
on, they should have their share. Mr. Webster took the 
position for Massachusetts, that she had been forced into 
manufactures by the policy adopted in 1824, in spite of her 
protests, and she now protested that the investments into 
which she had been drawn should not be sacrificed. 

You look in vain through the discussion of this bill for 
any broad principles. Much was said indeed about a national 
policy, but it all referred to this system which, at the first 
approach to actual discussion, resolved itself into political 
intrigue, a strife of sections, and a struggle between ''inter- 
ests." Much was said about broad principles, but all referred 
to the notion that by robbing all for. the benefit of the few 
it was possible in some way, which never was explained, to 
gain great benefit to all. The South adopted the policy of 
trying to make the bill as bad as possible. They proposed 
and advocated ahsurd and extravagant exaggerations, in the 
hope, apparently, that they could thus make apparent to the 
protectionists the enormity of their propositions and the 
absurdity of their demands. This policy did not work. 
The belief in the great protectionist dogmas had now become 
strong. Political exigeiicies were great, and the Northern 
protectionists either rejected the exaggerated propositions, 
or accepted them in good faith. This tariff came to be 
known as the "tariff of abominations," but its worst abomi- 
nations were forced into it by the perverse policy of the 
Southern men. What it concerns us to observe is, the evil 
effects of mixing up politics and President-making with fiscal 
legislation, and the exaggerations to which the protective 
system leads. 



350 PEOTECTION IN U. S. SUMNER. 

The result of this struggle was that the tax on molasses 
was raised to 10 cents per gallon. The tax on wool was 
put at 4 cents per pound and 40 per cent., to increase by 
5 per cent, annually until it was 50 per cent. A $1.00 
minimum was inserted in the scheme proposed at Harris- 
burg, and a tax of 40 cents a square yard was laid. This 
combination of taxes, resulting from political motives only, 
to favor the wool growers of the Middle and Ohio States 
and not to make woolens dear to consumers in the same 
districts and in the South, was exceedingly injurious to 
woolen manufacturers. You observe that it is not in human 
ingenuity to interpose in the delicate relations of trade by 
arbitrary enactments without doing damage. On account of 
these features of the tariff in regard to molasses and woolens 
it got only sixteen votes from New England (in the House) 
to twenty-three against it. 

The tax on bar-iron, not rolled, was raised to $22.40 per 
ton; if rolled, $37 per ton. Hemp was raised to $45 per ton. 
These features, with the tax on wool, gained the force which 
carried the bill in the House, 105 to 94. On the final vote 
there were in the affirmative sixty-one Adams and forty-four 
Jackson votes ; in the negative, thirty-five Adams and fifty-nine 
Jackson votes. The South, after putting the " abominations " 
in the bill, voted against it, except three votes. To show the 
want of good faith, it is significant to notice that on the 
motion for the previous question eleven Adams and ninety- 
nine Jackson men voted in the affirmative, and eighty 
Adams and eleven Jackson men in the negative. 

All the New England men and all the bona fide tariff men 
like Niles were dissatisfied with this bill, and began at once 
to agitate for its amendment. It has been customary for the 
tariff advocates to speak of it as a good bill, which only 
needed some sHght "adjustments." We see, I think, if we 
look at it candidly, the very best proof that such adjustments 
are required forever, that is, that they are impossible. It is 



PROTECTION IN U. S. — SUMNER. 351 

a specimen of the purest quackery in legislation. I think it 
shows also that the only petition any sober business man can 
ever address to the Legislature is to "let him alone" and, if 
possible, not legislate about his affairs at all. In this very 
debate of 1828, Mr. Stevenson of Pennsylvania, arguing for 
the tariff, said: "If legislation were as intelligent as com- 
merce is vigilant, much national evil might be avoided." I 
could only improve this by saying : "If it were perceived 
that legislation never can be as intelligent as commerce is 
vigilant, far more national evil would be avoided." 

The agitation of the Northern protectionists for the amend- 
ment of the tariff sank into insignificance in comparison with 
the discontent which the tariff caused in the South. The 
South was, of course, crippled by slavery, but it is undeniable 
that the complaint the Southerners made was just and well 
founded. They sold in a free market and bought m a pro- 
tected one. They claimed that they had inherited the 
grievances of the Colonies at the revolution, and that they 
stood just where the Colonists had stood at that time; asking 
why they should maintain a political connection in which the 
taxing power was abused for their oppression. When they 
were told that they must yield to the welfare of the whole, they 
replied that this was England s old argument, that the Colo- 
nies should bow to imperial considerations. Thus the tariff 
controversy, pushed to extremes by the power of the major- 
ity, and in disregard of the pleas of the minority for justice, 
assailed our political system in its most delicate and most 
vital part — the integrity of the confederation. The attempt 
of South Carolina to nullify the tariff act was not open dis- 
union and secession. It was worse. It was an attempt to 
remain in the Union and yet reduce the confederation to 
imbecility and contempt. Thus forty years after the first 
tariff with its 8 per cent, import on dutiable, we find that 
the system had steadily advanced, that the infant industries 
were as feeble and clamorous as ever, that the burden had 



352" PROTECTION IN U. S. — SUMNER. 

been increased until it was now equal to 41 per cent., that it 
had been elaborated into a system in which the lobby had 
been trained and educated, that it had corrupted politics and 
furnished capital for political schemes, that it had, on the 
testimony of those interested, done them no good, and that it 
had brought the confederation face to face with its greatest 
danger, that of disruption. 



CHAPTEE XX. 

TARIFF COMMISSION.* 
By Hon. Samuel J. Randall op Pennsylvania. 



MR. CHAIRMAN: It is my purpose in this debate to be 
as brief and practical in the expression of^my views 
as possible, preferring, for obvious reasons, the postponement 
of all general discussion of details of necessary legislation 
until the revision of the present tariff shall be directly under 
consideration. It is a subject at all times and in every 
country full of difficulty and embarrassment, and yet it is as 
old as government itself, and has exhausted, as we know, the 
highest mental efforts of the most celebrated statesmen. 
Some few points have been settled and accepted generally, 
but they are not many. Hallam, the justly esteemed consti- 
tutional historian, in his "Europe During the ]\Iiddle Ages," 
lays down this axiom, which our experience as a people jus- 
tifies, and which will not be disputed : 

*' It is difficult to name a limit beyond which taxes will 
not be borne without impatience when they appear to be 
called for by necessity and faithfully applied; nor is it 
impracticable for a skillful minister to deceive the people in 
both these respects. But the sting of taxation is wasteful- 
ness. Wliat high-spirited man could see without indignation 
the earnings of his labor, yielded ungrudgingly to the pubhc 
defense, become the spoil of parasites and peculators ? It is 
this that mortifies the liberal hand of public spirit: and 

* Speech in the House of Kepresentatives, May 5, 1882. 

(353) 



354 TARIFF COMMISSION — RANDALL. 



those statesmen who deem the security of government to 
depend not on laws and armies, but on the moral sympathies 
and prejudices of the people, will vigilantly guard against 
even the suspicion of prodigality." 

It is equally true that excessive taxation, even when it is 
successful in securing excessive revenue, is ultimately 
destructive of the sources of labor from which it is drawn; 
while at the same time it engenders extravagance, corruption, 
and decay. For when the government sets the example of 
extravagance, it is soon followed in every walk of life, and 
one does not need to be a prophet to foretell the general ruin 
which must inevitably result. Frugality and economy never 
destroyed any government, while they have built up the 
most powerful empires the world has ever witnessed. 

So much for general statement. Revenue laws have been 
a subject of discussion, agitation, and anxiety from the earli- 
est days of our political history. Indeed, Sabine, in his 
''Loyalists of the American Revolution," states positively 
his conviction, after careful study of documentary history 
and State papers, that they "teach nothing more clearly than 
this, namely, that almost every matter brought into discus- 
sion was practical, and in some form or other related to labor, 
to some branch of common industry." He states further on 
there were no less than twenty -nine laws which restricted 
and bound down Colonial industry. 

The manner of raising the necessary revenue for the sup- 
port of the Government has been, as I have said, at all times 
in the United States the cause of irritation to the people. 
And we need not be surprised at this when we consider the 
vast extent of our domain, and the almost endless diversity 
of productions of the soil, and of manufactures, and every 
other branch of human industry. 

The existing overflowing Treasury brings a demand for 
reduction of the tariff and internal-revenue taxes. In my 
opinion, in such a condition of our finances, reduction of tax- 



TARIFF COMMISSION RANDALL. 355 

ation should at once begin. Unnecessary taxation is injuri- 
ous to the interests of the people in many directions. Gov- 
ernment has no justification for the collection of burdensome 
taxes in excess of the sum requisite for the support of its 
proper administration. What have we seen in this Congress ? 
The excess of our resources has induced the presentation of 
every conceivable scheme to deplete the Treasury, and our 
expenditui'es, unless checked in time, will reach enormous 
proportions and bring back again, as prior to 1874, a satur- 
nalia of extravagance and disgrace. 

In the matter of taxation we are acting tinder a written 
Constitution. " Congress shall have power to lay and collect 
taxes, duties, imposts, and excises, to pay the debts and pro- 
vide for the common defense and general welfare of the 
United States." I need not enlarge upon our traditional 
history in this regard, and it will be accepted as true that 
only at periods of great necessity and urgency have excise or 
internal taxes been resorted to. Our present internal-revenue 
system grew up out of the necessities of war, and when 
those necessities cease that taxation should disappear. When 
the framers of the Constitution granted the power to impose 
excise duties it was a point of serious dispute and was agreed 
to, finally, only as a resort in case the Government should be 
involved in war, and not to be exercised as a permanent 
mode of raising revenue. 

I will not enlarge upon this; I believe it to be incontro- 
vertible, however men may change sides because of other 
considerations affecting other questions; and I do not forget 
that Thomas Jeiferson, the author of the Declaration of 
Independence and the founder of the Democratic party, 
brought about the repeal of internal or excise taxes as one of 
the very first acts of his administration as President of the 
United States. 

I favor, therefore, as speedily as possible, a total abolition 
of our internal-revenue system, and I am ready to join 



356 TARIFF COMMISSION — RANDALL. 

hands with any and all in this House, in favor of an equali- 
zation of our duties on imports. No one who understands 
the existing tariff laws will deny the justice and necessity 
of revision. The present duties were for the most part 
levied during war and for the purpose of raising a large 
war revenue. It will suffice in this connection to quote the 
Industrial League as unanswerable in this regard, as it is an 
admission on the part of those who favor the highest pro- 
tective duties: 

^'They consider such revision desirable for the interests 
both of the industries affected and those of consumers, 
partly on account of some original imperfections in the 
present tariff, and partly on account of the modifications 
which are demanded by the changes which have occurred 
in conditions of production and commerce." 

There should be, however, no vicious assaults on these 
laws. Changes should have firm foundation in reason, and 
especially should we avoid mere experiment and purely 
speculative efforts on this vital subject. Our excess of 
revenue now approaches in amount the annual receipts from 
internal or excise taxes. If proper economy be exercised 
in expenditures they can be brought within the limits of our 
ordinary resources of taxation, enabling us without jar or 
friction to repeal internal-tax laws, which are inquisitorial 
and offensive in the highest degree. These taxes reach 
vexatiously every citizen in his business, in his household, 
and in the affairs of . every- day life until they have become 
almost unendurable. There is no longer an excuse, in my 
opinion, for their continuance. 

The objection to direct taxes is equally as strong to inter- 
nal taxes; and either or both are justified only by stern 
necessity. They are irritating and dangerous, and internal- 
revenue taxes entail upon us the keeping up, as at present, 
somewhere near five thousand officers engaged in their col- 
lection, distributed in every county of every State, tainting, 



TARIFF COMMISSION — RANDALL. 357 

as we know, the source of all power in this Republic, the 
elections by the people. Who favors direct tax? No one; 
and if the internal taxes were not now imposed by law, is 
there a man who would risk his political future by asking 
that the system should be put into operation? I sincerely 
believe that there is not a man. 

I did hope when this Congress assembled that before 
the adjournment of this session a very large reduction of 
internal taxation would have resulted from our labors. The 
Committee on Ways and Means seemed to favor a reduction 
of $70,000,000, but the fiat of a Republican Congressional 
caucus overruled that good intent. Thus the majority of 
the Representatives in this House of one political party, and 
of a party representing a doubtful majority of the people 
even at the time of its election, regulates the current of 
remedial legislation, and in this instance on a subject which 
should be non-partisan. Thus the opportunity of relieving 
our tax-annoyed and tax-burdened constituents may be lost. 

The reduction as now recommended by the Committee on 
Ways and Means reaches in great part those most able to 
pay, leaving the great body of consumers without relief. 
How long the latter will permit this state of things to con- 
tinue will probably be determined at our next Congressional 
elections. With the repeal of internal or excise taxes will 
come a resort exclusively to duties on imports as the main 
supply of our resources, and I maintain if our expenditures 
be kept within just and reasonable bounds we can from this 
source derive adequate revenue for the administration of 
the Government in all its constitutional and legitimate 
functions. 

The estimates for the fiscal year ending June 30, 1883, of 
the amount to be raised from duties on imports is $217,000.- 
000, and from all other sources, leaving out internal taxes, 
$30,000,000; so that the total abolition of excise taxes 
would still leave to the Government in the neighborhood of 
$250,000,000. 



358 TARIFF COMMISSION — RANDALL. 

It must be recollected, however, that while our current 
annual payment of interest on the public debt has been 
reduced to $61,000,000 (and it will continue to decrease), 
yet there will be a greater increase in liabilities on account 
of pensions. Taking the years ending June 30, 1877 and 
1878, as a criterion, this amount of receipts would still, with 
prudence and frugality, leave a sufficient revenue. Let 
me recapitulate: the net ordinary expenditures for year 
ending June 30, 1877, $144,209,963.28; the net ordinary 
expenditures for year ending June 30, 1878, $134,463,452.15. 
In the latter year no appropriations were made for rivers 
and harbors. The amount of appropriations for these 
objects for the former year was about $5,000,000, so that 
a fair average of the net ordinary expenses based on these 
two years would be $142,000,000. Let us to this amount 
add on account of interest $61,000,000, and for sinking 
fund about $45,000,000 per annum, a sum which I deem 
sufficient in amount each year toward liquidation of the 
aggregate amount of the debt, and we have a gross sum 
of expenditure of $248,000,000. 

There will equitably stand to the credit of the sinking 
fund for the year ending June 30, 1883, taking the bonds 
already called for payment up to July 1, 1882, $40,423,700, 
The sinking fund for the current fiscal year and arrearages 
for prior years were fully provided for by call which 
matiired March 13th last, and prior to that date. The bonds 
in call maturing from that date to June 30th next are not 
applied to the sinking fund, because it is full. While the 
bonds included in calls maturing from March 13th to June 
30th, being calls one hundred and eight to one hundred 
and twelve and part of the one hundred and seventh, amount- 
ing to $40,423,700, are not applied to the sinking fund, yet 
as arrearages have been in the years past continued to be 
counted on book accounts there is no reason why the pay- 
ment of our bonds in excess of the legal requirements of 



TARIFF COMMISSION — RANDALL. 359 

the sinking fund should not equitably be credited, thus 
protecting us against a deficiency in the event that the 
internal taxes are largely reduced or altogether abolished. 

The amount which is required by law to be placed to the 
credit of the sinking fund for the year ending June 30, 1883, 
is $45,122,110.80. By reason of the payments already 
made there is, therefore, due only an equitable balance of 
$4,698,410.80 to be credited to sinking fund for the year 
1883, with period of time from July 1, 1882, to June 30, 
1883 — an entire year. 

In my opinion $75,000,000 of payment on account of cur- 
rent pensions and arrears is as much each year as can be 
safely made with due protection against fraud. Until the 
arrears are all paid — say $45,000,000 per year in addition to 
appropriations of years 1877-78 — we might be required to 
continue the tax on whisky, say at fifty cents per gallon, or 
we could encroach upon and reduce our now excessive 
unemployed balance in the treasury. Admitting there 
might be a moderate deficiency, we have, to meet such defi- 
ciency, now in the Treasury $136,000,000 above and beyond 
every claim on the Government dollar for dollar. 

It is thus made plain that, with economical expenditures 
and reduced appropriations for the year, we are fully pro- 
vided. 

As I have already said, a heavy reduction or the abolition 
of internal taxes would compel immediate revision of our 
tariff laws. How that can be done with most expedition is 
the question which most directly concerns us. 

I do not favor a tariff enacted upon the ground of protec- 
tion simply for the sake of protection, because I doubt the 
existence of any constitutional warrant for any such con- 
struction or the grant of any such power. It would mani- 
festly be in the nature of class legislation, and to such 
legislation, favoring one class at the expense of any other, I 
have always been opposed. 



360 TARIFF COMMISSION — RANDALL. 

In my judgment tHe question of free trade will not arise 
practically in this country durnig our lives, if ever, so long 
as we continue to raise revenue by duties on imports, and 
therefore the discussion of that principle is an absolute waste 
of time. After our public debt is paid in full our expendi- 
tures can hardly be much below $200,000,000, and if this is 
levied in a business-like and intelligent manner it will afford 
adequate protection to every industrial interest in the United 
States. The assertion that the Constitution permits the 
levying of duties in favor of protection "for the sake of 
protection " is equally uncalled for and unnecessary. Both 
are alike delusory and not involved in any practical adminis- 
trative policy. If brought to the test, I believe neither would 
stand for a day. Protection for the sake of protection is 
prohibition pure and simple of importation, and if there be 
no importation there will be no duties collected, and conse- 
quently no revenue, leaving the necessary expenses of the 
Government to be collected by direct taxes — for internal 
taxes would interfere with the protective principle, and when 
the people were generally asked to bear the burden of heavy 
taxation to sustain class legislation, and the interests of a 
portion of our people at the expense of the great bulk of 
our population, there would be an emphatic and conclusive 
negative. So, too, with free trade, there is hardly a man in 
public life who advocates it pure and simple. Nobody wants 
direct taxation, although it would bring taxation so near 
and so constantly before the people that Congress would 
hesitate long before it voted the sums of money it now does, 
if not for improper at least for questionable purposes. 

Let me cull a few sentences from recent debates to show 
the feeling on the subject 

Ex-Governor Hendricks says: ''A horizontal tariff ' is 
impossible." 

Senator James B. Beck says: ''Nobody asks or expects 
this Congress to establish free trade or tear down custom- 



TARIFF COMMISSION — RANDALL. 361 

houses. • • • In adjusting taxation on imports with a 
view only to obtain revenue or "for revenue only," we never 
thought of discriminating against American industries, or 
of depriving them of the incidental benefits or protection a 
proper revenue tariff would afford.'* 

Senator Bayard says: " The power to tax by laying 
duties upon imports may be so exercised as to do what it 
has done ever since the foundation of the Government, and 
this is to give an advantage equivalent to the amount of the 
tax to the American producer or manufacturer over his for- 
eign competitors in the same line of production or manufac- 
ture, and this becomes his protection." 

Senator "Williams of Kentucky says: "Nobody is for 
free trade just now." 

Senator Cooke of Texas says: " As an inevitable conse- 
quence domestic manufacturers and producers of the articles 
upon which such revenue import duties are laid are to that 
extent protected against foreign competition." 

Mr. Carlisle of Kentucky in substance reiterates these 
sentiments. So they all say, with rare exception. The real 
question presented and which is in controversy is the revision 
of taxes, so we may hold the control of the markets of the 
world for the benefit of our excess of production over the 
home consumption. 

I favor what Mr. Jefferson declared to be " discriminating 
duties," which General Jackson described as "a judicious 
tariff," and what Silas Wright designated as "incidental 
protection." To accomplish these ends wisely and well re- 
quires the greatest circumspection and the exercise of the 
most careful judgment. 



16 



CHAPTER XXL 

FREE TRADE * 
By Hon. Frank H. Hurd. 



MR. CHAIRMAN, I desire to say that the Marquis of 
Ripon is the representative of the Liberal party 
of England in India, sent there to secure the abrogation of 
India's protective tariff system and open her markets to the 
operation of the principles of free trade. 

This policy has been carried out, and under Ripon's 
administration, as I have said, India has adopted commercial 
freedom. Immediately Great Britain commenced the devel- 
opment of India's agricultural production. Large extents 
of territory were made cultivable through the adoption of 
systems of irrigation. Railroads were commenced and the 
work of construction was vigorously pushed. The interior 
was opened up to the coast, so that the products of the soil 
could be cheaply loaded in the vessels. Then the most 
suitable seeds were distributed among the people. Cheap 
agricultural machinery was afforded them. Under this 
impulse, wheat production was so stimulated that last year 
there was a production in India of more than 300,000,000 
bushels, of which a large portion was a surplus above 
domestic consumption. Of this 40,000,000 of bushels have 
been exported, while five years ago there was scarcely a 
cargo of grain sent from the shores of that country. In the 
first three months of this year this exportation has largely 

* Speech in the House of Representatives, May, 1884 

(362) 



FREE TRADE HURD. 363 

increased over tlie same period of last year, indicating for 
this year an exportation of nearly 70,000,000 Ifushels. 

"What has been the effect of this increased production in 
India upon our markets ? In the last nine months there has 
been a decHne in the exportation of American cereals of 
$47,000,000 in value, and wheat has gone down in Chicago 
to less than eighty cents per bushel, the lowest price that has 
ever been known in that market. It is notable, Mr. Chair- 
man, that just as the exportation of wheat has increased 
from India, the exportation has diminished from the United 
States. This development of wheat production in India is 
the natural and inevitable result of the protective tariff in 
America, which puts high duties on foreign goods. England 
refuses to buy of the farmers of America, who wiU not take 
her goods in exchange, and seeks her food supply from 
those countries who will take her productions ; and thus 
from the farmers of America is passing away the last vestige 
of a foreign market. 

I say to the farmer of America that the prospect for him 
is by no means encouraging. With elevators, granaries, and 
warehouses all filled to overflowing, with the old crop still 
unsold, with the vast fields of the great West greening to the 
coming harvest, with crops unexcelled in India, almost ready 
for the market, with splendid promise among all the wheat- 
growing nations of the earth, and with the price of wheat 
less than eighty cents at Chicago, I predict that before 
January next the price of wheat will be so low that it will 
not pay the cost of production, and the corn raised on the 
western prairies will be burned again for fuel as was the 
case years ago. When that time arrives the farmers will be 
beggars in the midst of their own plenty and paupers by 
the side of their own golden gathered sheaves. There is 
absolutely no relief to the American farmer, except in mak- 
ing foreign markets for him. Talk about the home market 
which American manufacturers make for him. Already 



364 FREE TRADE HURD. 

their demand for agricultural product is diminishing; already 
they are complaining of overproduction everywhere. It is 
not in their power to consume what the farmers of this 
country can produce. There are, Mr. Chairman, but two 
ways in which the farmer can find rehef. One is for the 
proper authorities to make reciprocity treaties by which the 
markets of other nations will be open to the products of 
this country, and the other is for Congress to reduce the 
expense of living by cutting down the tariff rates. 

The farmers sell in the lowest market and buy in the 
highest. They cannot cheapen any further the cost of pro- 
duction, but they can reduce the tariff, cheapen the cost of 
living, and thus save $450,000,000 annually. 

I have often thought that people in considering this branch 
of the subject do not give sufficient attention to the effect 
of our patent laws in giving protection. Those who manu- 
facture with the protection of our patent system have a 
monopoly of that business for seventeen years They can 
in most cases charge, in consequence of this monopoly, what- 
ever they please for the article manufactured, because they 
are free from competition by their patent. They do not 
need any protective tariff. Indeed, the latter can only do 
them injury, for as the manufacturers of the patented article 
can charge the same price without a tariff as with it, 
the only effect of the tariff upon them is to increase the 
price of their raw material and plant, and thus diminish 
their profits. From what I have been able to learn about 
the history of manufacturing in this country, I am satisfied 
that four-fifths of those who have been successful in that 
business have become so through the operation of patent 
laws, who if they knew their own true interest would now 
be bitter enemies of the whole protective tariff system. 

But what is the effect of tlie tariff upon those manufacturers 
who have the protection of the tariff alone ? I have been 
surprised at the want of knowledge exhibited by manufac- 



FREE TRADE KURD. 365 

turers with whom I have talked upon the subject. When 
I have asked them how the protective tariff affected them, 
I have found very few who could tell me exactly the increase 
of price which the tariff made to them in their business. 
And when I asked them how much it affected the price of 
their product at any particular time, they were almost always 
unable to tell. When I have inquired how much the tariff 
increased the prices of their raw material and plant, and of 
the articles they were obliged to have in order to manufac- 
ture, I have found scarcely any who had given attention to 
this point. Why, Mr. Chairman, they will investigate the 
laws of trade, the laws of supply and demand ; they study 
the question of location, the question of interest, and every 
other question that affects their business, but they will not 
study the statute books of their country in order to learn 
how the laws of the land affect them. And yet these very 
same people will say that the supporters of the Morrison 
bill are disturbers of business, because they propose to 
disturb existing laws the methods of the operation of which 
upon them they admit they do not understand. 

I know, however, of some manufacturers who have studied 
this question. 1 have a statement by one of the leading 
manufacturers in the State of Ohio, a manufacturer of paper, 
who says if the duties were taken off of all the plant and 
all the raw material he was obliged to have in order to make 
paper, he would surrender the duty on paper itself. 

And I have the statement made by one of the largest 
woolen manufacturers in the State of New York, at a public 
meeting in Chicago, a meeting at which I believe my col- 
leage on the Committee on Ways and Means, the gentleman 
from Ohio [Mr. McKinley], presided, to the effect that if the 
Government would give him free trade in brick and stone 
and mortar and building material and machinery and coal 
and wool and dye-stuffs, and all he needed in order to manu- 
facture, he would take free trade for his manufactured pro- 



366 FREE TRADE — HURD. 

duct. What was that but to say that all that protection 
gave him with one hand it took away from him with the 
other ? I believe that if the manufactui-ers of this country 
in the present condition of the market would study this 
question, they would find that the increase of price the tariff 
gives them is more than consumed in the increase of the 
price of the plant, of raw material, and everything else they 
must have in order to manufacture what they sell. 

Anyhow, I am willing as one of the Committee on Ways 
and Means to propose to the manufacturers of this country, 
if they will show what the net result of protection is to them, 
that I will help to pass a law giving them that net result, 
leaving them undisturbed in every other respect. The effect 
of that would be to make the rates much lower than those 
fixed in the Morrison bill, to leave the manufacturer as well 
off under the law as he is at present, and give the people 
cheaper goods everywhere. 

Mr. Chairman, all manufacturers need cheap raw material 
and plant and a large market to sell to. The protective 
tariff deprives them of both. It increases the price of the 
one from forty to fifty per cent, more than it ought to be, 
and it necessarily limits the other. The manufacturers aU 
over the country now are complaining of overproduction. 
Overproduction is only another word for the phrase, limited 
market; for no man overproduces who has a market large 
enough to consume what he makes. Our manufactures are 
fastened in the American market. The very law which 
gives them the control of the home market deprives them 
of every other. The inevitable effect of protection in in- 
creasing the price of production disables them from com- 
peting with the foreigner who manufactures with cheaper 
material. 

Sir, this very day manufacturing enterprises everywhere 
are in a condition of embarrassment, and, as manufacturers 
have testified before the Ways and Means Committee, because 



FREE TRADE — HURD. 367 

they have more goods on hand than they can selL The neces- 
sity has come to them of a greater market than the domestic 
one and they must have it; but they never can have it as 
long as the high tariff stands in the way of trade and ex- 
change. If there ever was a day in America, Mr. Chair- 
man, when manufacturers were benefited by protection, that 
day has gone now. 

Our manufacturers have not, markets large enough, they 
have surrendered the markets of the world to England. 
Last year England sold abroad one billion five himdred 
milhon dollars' worthy of manufactured goods, and America, 
exclusive of the manufactured products of agriculture, sold 
abroad barely seventy million dollars' worth. Fifteen 
hundred millions of dollars for that little stormy island and 
seventy million for this continent! Yet we have opportuni- 
ties and advantages vastly superior to hers. She has to go 
thousands of feet under the land and under the sea to get 
her iron and her coal, and go thousands of miles over the 
land and sea to get her cotton and her wool. We find here 
our iron and coal close to the surface, on the mountains and 
hillsides, and can tumble them together into the furnaces. 
We have the vast cotton fields of the sunny South and the 
wide pastui'^ fields of the West for sheep to give us an 
abundance of cheap cotton and cheap wool. It is an in- 
effaceable stain on the American name that the markets of 
the world have thus been surrendered to Great Britain, our 
great rival. (^ Think you that if we could have sold abroad 
of our manufactured goods one billion dollars' worth last 
year there would have been this stagnation, overproduc- 
tion, and depression? 

If I could burn into the brains of the manufacturers of 
America one sentence, it would be this: "Turn from this 
constant introspection to the nations of the earth; down 
with the walls, out to the sea." There are two bilhon people 
in the world who want to buy what you make, i Rise to the 



368 FREE TRADE — HURD. 

height of the great thought that this immense population 
can be supplied by you with the implements of husbandry, 
the tools of artisanship, and the various articles of human 
handicraft. But they will not take your goods until you 
take theirs. Let your tariff disappear, and then, manu- 
facturers! your attention will be diverted from the profitless 
contests of domestic competition to the generous rivalries of 
foreign trade and in the easy victories which you will win, 
a wealth will come to you of which you do not dream to-day. 

In conclusion, let me say a word as to the effect of this 
tariff system upon the wages of labor. It is claimed that 
the wages of the laborer are increased by protection. This 
cannot be, except upon this theory ; that by legislation you 
keep out of this country the products of foreign manufac- 
turers from competition with the products of the American, 
and thereby the latter is enabled to charge higher prices for 
his goods, out of which he makes greater profits, from 
which he is enabled to pay and does pay larger wages to his 
employes. 

It is manifest that this theory cannot apply to the ordinary 
day laborer, or to artisans like the mason and the carpenter, 
or to the farm worker, or the railway employee, for none of 
those make any articles with which similar foreign articles 
can come into competition. These, therefore, are all unpro- 
tected laborers, and the only influence of the tariff upon 
them is to increase the cost of their living, and thus to take 
from instead of add to their wages. 

But it is said the laborers are benefited and wages in- 
creased in the manufacturing industries. I am perfectly 
willing to admit that if you will compare this country with 
any other country of the Old World which has precisely the 
same tariff policy, the wages in this country will be, as they 
ought to be, higher than the wages there. Take, for in« 
stance, England and America, and let them both have eithei- 
the same protective tariff or' the same policy of free trade, 



FREE TRADE — HURD, 869 

and you will always find wages higher here than there. But 
this is not because of the effect of legislation, but as a result 
of tlie peculiarly favorable conditions for labor which we 
enjoy politically and territorially. 

The protectionist, starting with the proposition that wages 
are higher here, maintains that there should therefore be 
protection to American labor in order that it may not be 
brought into competition with the pauper labor of the Old 
"World. My mind reaches the very opposite conclusion. 
The fact that we have high-priced labor here, better wages 
for labor here than abroad, is conclusive evidence to me that 
we do not need protection, and that what we do need is the 
speedy opening of the markets of the world. 

High-priced labor means efficient labor, skilled labor, 
intelligent labor, productive labor. Pauper labor means 
inefficient labor, unskilled, unintelligent, unproductive labor. 
Let competition come between high-priced labor and pauper 
labor, and pauper labor will always go to the wall. I can 
understand why the poorly-paid laborers of the Old World 
should get down on their knees and lift up their hands and 
pray for protection against the high-priced labor of America; 
but I can not understand why the high-priced, efficient, 
productive labor of America should beg protection against 
the products of the pauper labor of the world. 

Mr. Chairman, it is inevitable that when competition 
comes between these classes of labor, high-priced labor 
must always win the victory. I will mention an instance 
which will illustrate my meaning. Gunny-bags are made 
out of jute, and this manufacture is carried on very largely 
in Calcutta by the cheapest labor in the world, the women 
getting from five to eight cents a day and the men from 
seventeen to twenty cents. Within a short time, as I have 
been informed, a gentleman has started the business of 
making gunny-bags in one of the eastern cities. He has 
built a structure, obtained his machinery, and he pays 
16* 



370 FEEE TRADE — HURD. 

women employees eighty cents to one dollar a day, men 
one dollar and twenty-jQve to one dollar and fifty. Yet with 
this high-priced labor he has almost gotton control of the 
gunny-bag market in South America and this country. He 
says if you will let him have jute free he will undersell the 
Indian pauper labor in the streets of Calcutta itself. 



CHAPTER XXII. 

THE TARIFF. 
By Hon. Wm. P. Frye.* 



MR. PRESIDENT: The Senator from Texas [Mr. 
Coke] on Tuesday last used the following language: 
*' The word protection should be expunged from our vocabu- 
lary. It means monopoly; it means exclusive privilege; it 
means subsidy; it means that all shall be taxed and made 
to pay tribute to the favored few. It means combinations 
and lobbyists; a diversion of legislation from legitimate 
channels — from the great public interest to the interests of 
a few favored ones. It means a wholesale robbery of the 
people, and especially of the American workingman, in 
whose behalf it is invoked." 

The Senator from Kentucky [Mr. Beck] in his speech, in- 
dicated very clearly that his opinion was, that protection was 
simply a pliant tool of New England monopolists, and his 
colleague [Mr. Williams] succeeding him, declared it was a 
legalized tyranny. Mr. President, you may consult the 
Democratic party for the last sixty years, go back to the 
heyday when Mr. Hayne of South Carolina declared in the 
United States Senate that protection would prove to the 
country worse than an Egyptian plague, and that free trade 
would abound in blessings next to the Christian religion, 
and come down to now, and you will find that it has 
denounced a protective tariff as "robbery," as "plunder," 

* Speech in the United States Senate, February 10, 1882, 

(371) 



372 THE TARIFF FRYE. 

as "a system of swindling," as "a means by which to make 
the rich richer and the poor poorer," as a specter grim and 
ghastly which takes its place at the head of every poor 
man's breakfast-table, which scowls at him every time he 
lights his pipe, and yet, sir, right in the teeth of these sav- 
age denmiciations, fidelity to truth compels me to declare 
that I am a protectionist from principle. If there was no 
public debt, no interest to pay, no pension list, no army and 
no navy to support, I still should oppose free trade and its 
twin sister, "tariff for revenue only," and favor protective 
duties. 

Mr. President, it seems to me that protection is absolutely 
essential to the encouragement of capital, and equally neces- 
sary for the protection of the American laborer. Capital 
needs the former more than the latter, I admit, for capital 
can easily take care of itself. If it gains no adequate 
returns in one business, it can readily seek it in another; if 
it reaps no profit at home, may try new fields abroad; may 
even let all effort alone, hide itself in Government bonds, 
and, enthroned there in perfect security, draw regularly its 
interest. Capital, too, is fearfully timid. The distinguished 
Senator from Ohio [Mr. Sherman] a few days since declared 
that there was nothing in the world so easily frightened as 
money. And yet the prosperity of the country imperatively 
demands its constant use, its investment in every industrial 
enterprise. The opening of mines, the forcing from the 
hiding places of the earth coal, iron, and copper, the smelt, 
ing of ores, the erection of forges, foundries, and factor- 
ies, the employment of men who must work or starve, 
demand its help. To inspire it with the requisite courage, 
to induce it to a useful activity, I would encourage it. But 
the labor of this country beyond that of any other demands 
protection against the cheap labor of Europe, for the laborer 
here has responsibihties, duties, and necessities unknown 
there. His wages can never go down to theirs without 



THE TARIFF FRYE. 373 

absolute destruction to him and imminent danger to the 
RepubHc. The large majority of our men must earn their 
bread by the sweat of the brow. Under our Constitution 
they are the Government. How can hungry men govern? 
How can a half -paid, half -fed, half-educated citizen rightly 
and intelligently understand and perform the duties of citi- 
zenship? He must have good food, enough of it, good cloth- 
ing, school-houses for his children, comforts for his home, and 
a fair chance to improve his condition. To this end I would 
protect him against competition with the half -paid laborers 
of European countries who have never enjoyed his privi- 
leges, experienced his comforts, shared his duties and 
responsibilities, to whom his very necessities would seem 
luxuries. 

The Senator from Texas joins issue with me on this ques- 
tion of labor, and in the same speech declares: " But it is 
said that much higher wages are paid to American opera- 
tives than to European workmen, and that to enable the 
me.nufacturers to pay these higher wages they must have a 
protective as distinguished from a purely revenue tariff, in 
order to exclude European competition. Do American man- 
ufacturers pay their operatives higher wages ? Nominally 
and ostensibly they do, but really and in fact they do not." 

That is a most amazing declaration. If it is right, I am 
wrong; if it is right, every conclusion of the argument of 
the Senator from Texas is entirely logical and legitimate. 
If that declaration made by the Senator is false in fact, 
then the three hours' argument founded upon it is an entire 
fallacy. Now, sir, I hold in my hand a book entitled " The 
State of Labor in Europe," printed by authority of Con- 
gress, ''reports from United States consuls," and the Senator 
from Texas may take it, turn from blank leaf to blank leaf, 
he may read every page from beginning to end, and I defy 
him to point to one single statement of fact, to one single 
table of statistics, which does not prove conclusively that 



374 THE TARIFF — FRYE. 



Ms statement is not correct and that labor in Europe is 
paid from one-half to two-thirds less than it is in America 
to-day. 

Again, I have now in my hand a book entitled ''Labor 
in Europe and America," by Mr. Young, chief of the United 
States Bureau of Statistics. Let the Senator take this, turn 
it from blank leaf to blank leaf, and he cannot find a single 
fact stated in the whole book which justifies his statement. 

Now, Mr. President, 1 do not propose to rely entirely 
upon consular reports. I am aware of some difficulties 
attending the getting at labor statistics in England and 
France and Belgium and Germany. Let an American con- 
sul go to the superintendent of an English mill, step into 
the counting-room, and ask him for his price-list paid for 
wages for his laborers; will he be treated politely; will he 
receive the same kind treatment he would in America? By 
ho manner of means. They are determined, if possible, 
that information as to wages shall not go out. I am willing 
to admit that in some favored localities, in some particular 
class of work, for instance, if you take some of the most 
skilled spinners and weavers in an English cotton mill and 
in an English woolen mill, you will find that for two or 
three in a room, the wages will come nearly up to the 
wages in an American cotton or woolen mill; but you take 
the wages of the laborers right through the mill, and I 
defy any man on earth to show that they are not as much 
as one-half below the wages in the cotton and woolen mills 
of America? 

I do not rely upon these consular statements alone; I hap- 
pen to know men in this country who own mills in Great 
Britain and in the United States, who hire laborers there 
and here, and I obtained from them information so that 
there could be no mistake about this. The Senator from 
Texas must remember that wages paid to the operatives in 
the cotton factory by no means represent the cost of manu* 



THE TARIFF — FRYE. 375 

facturing. The cost of the mill and machinery, of the coal 
and gas, 90 per cent, of which is labor, and the taxes upon 
the property must come into that computation. 

Now, sir, as to the comparative cost of mills in the two 
countries, I call in evidence the statement of the treasurer of 
the Conant Thread Company of Pawtucket, Rhode Island. 
They own and run thread-mills in Great Britain as well as 
here: 

Office of the Conant Theead Company, 
Pawtucket, R. I., January 19, 1883. 

In reply to yours of the 18th we can say, that from the best data 
we can obtain, the cost of building and equipping a cotton factory 
in New England, as compared with the cost of a similar structure 
in Lancashire or Scotland, is just about double, or, to give a few 
figures, a new fire-proof brick structure, furnished with steam 
power and all necessary adjuncts, in shape of store-houses and 
accessories, containing 50,000 to 80,000 spindles, spinning, with all 
machinery complete for spinning 60s. to 120s. yarns, land and all, 
can be furnished in Lancashire to-day from twenty-two to twenty- 
four shillings per spindle. 

In Rhode Island the same will cost $12 to $15 per spindle. 

Trusting this will be satisfactory, we remain, 

Yours truly, CONANT THREAD COMPANY, 

H. Conant, Treasurer. 

Mr. President, what makes that difference in cost? 
Remember that the mill, the eoal, the gas, are aU 90 per 
cent, labor. Remember that the trees in our forests, the 
clay in our banks, the stone and slate in our quarries, the 
coal in our mines, are certainly as cheap as in Europe; and, 
remembering these things, will the Senator from Texas teU 
me what makes the mills here cost twice as much as they 
cost there ? It is because 90 per cent, of the cost is labor, 
and the labor there is paid only one-half as much as labor 
here, and no other reason can be suggested or given. 

But, Mr. President, as to the wages of the operatives. 
Again I cite the Clark Thread Company. I have their pay- 



376 



THE TARIFF — FRYE. 



roll in Scotland and here, and there can be no mistake, I 
take it, about that. Mr. Clark says: 

Clark Thread Company, Newark, N. J., 
January 25, 1882. 
Dear Sir : As requested, we herewith send you a list of wages 
paid the workers in Clark & Co.'s, Paisley, Scotland, and the 
wages paid the same class of workers in Newark, N. J. 



Employes. 


Paisley, Scotland. 


Newark, N. J. 


girls: 
Spoolers, 


Per week. 
$3.50 to $3.75 
3.50 to 3.75 
3.50 to 3.75 
2.25 to 2.50 
1.50 to 1.75 
1.25 to 

7.00 to 7.50 
7.00 to 7.50 
7.00 to 7.00 
6.50 to 6.50 
6.00 to 6.00 


Per week. 
$7.00 to $9.00 
7.50 to 8 50 


Heelers 


Cop-winders, 


7.50 to 8 50 


Twisters 


5 00 to 6 60 


Strippers 


3.00 to 3.00 


Bobbin-cleaner, 


2 50 to 2 50 


men: 
Carpenters, 


16.50 to 18.00 


Machinists, 


16.50 to 18 00 


Dyers, 


15.00 to 15.00 


Bleachers, 


13.50 to 13.50 


Firemen 


12 00 to 13 00 







The above is, to the best of my knowledge, correct. 

These letters, coming from men who know whereof they 
affirm, show by their tables the wages paid the operatives in 
the two countries. About it there can be no mistake, for 
the same men pay the wages there and here. This conclu- 
sively shows that in Europe the laborers do not receive one- 
half as much pay as do ours, and yet the Senator from Texas 
declares they are paid alike. 

Let me ask the Senator from Texas why is it that 
11,000,000 men and women have left Europe, nearly all of 
them laborers, and have sought our shores ? Why is it that 
not 200,000 of them have ever returned to Europe ? Why 
is it that last year 700,000 laborers from Europe came to our 
country? Why is it that 50,000 came from England, the 
highest wage-paying country in Europe ? Why is it that 



THE TARIFF — FRYE. 377 

you cannot go into a cotton-mill or woolen-mill in America 
to-day and not find on the pay-roll scores of English mule- 
spinners and card-strippers and dyers; and why is it that 
they never go home, "but the moment they lay aside from 
their high wages enough they send for their brothers, their 
fathers, their wives, and their children to come out too ? 

Sir, Europe has 312,000,000 inhabitants, Massachusetts 
has 1,700,000. Europe has 184 times as many inhabitants 
as Massachusetts. Both are laboring communities, both 
engaged principally in manufactures. Why is it that in 
Massachusetts the laborers have $231,000,000 of money in 
the savings banks, one-seventh as much as the -^hole 312,- 
000,000 in Europe in their savings banks, postal and other? 
Why is it that in the North alone — leaving out the South 
only because she has few if any savings banks — why is it 
in the States excluding the South, having a population of 
about thirty millions or thirty-five millions, they have $200,- 
000,000 more in the savings banks than they have in all 
Europe with its 312,000,000 of people ? 

Sir, to-day, in this nineteenth century, when most men, 
thank God, can read and write, it will not do to tell the 
American people that the wages in Europe are as high as 
the wages in America. I am not yet convinced, and am 
still a protectionist. The Senator from Kentucky sitting 
near me [Mr. Williams] and the other Democratic Senators 
and the Democratic party sharply join issue with me and 
say, " No robbery, no plunder, no system of swindling; we 
are for free trade; we are for a tariff for revenue only." 

Mr. President, what are free trade and a tariff for revenue 
only ? They are one .and the same, now and forever, as 
inseparable as Siamese twins. 

Free trade is the admission into our ports, the discharge 
upon our wharves, the offering in our markets the products 
^'nd manufactures of the world, regardless of mere cost, 
regardless of the amount of labor entering into them and of 



378 THE TARIFF — FRYE. 



the price paid for that labor, regardless, too, of the effect 
upon our industries. By it France, Germany, Belgium, and 
England are solicited to bring into our market their silks, 
cottons, woolens, linens, manufactures of iron and steel, the 
products of the loom, the forge, and the farm, on the pro- 
duction of which the labor expended has cost from one- 
quarter to two-thirds of what we should have been compelled 
to exDend in producing the same. 

WHAT IS A TAEIFF FOE EEVENUE ONLY ? 

I suppose that England has such a tariff more nearly 
than any other country, but even her free-trade theories 
allow her to protect her manufactures by an increased duty 
upon her manufactured article. 

The chief items of receipt under the head of customs 
duties for England during the past year were, from — 

Chicory, $360,000 

Cocoa, 230,000 

Coffee, : 1,025,000 

Currants, 1,380,000 

Figs, 130,000 

Kaisins, 775,000 

Rum, 11,510,000 

Brandy, 7,935,000 

Tea, 18,500,000 

Tobacco and snuff, 43,000,000 

Wine, 7,000,000 

The revenue from these duties last year was $96,000,000; 
almost, if not quite, as much per capita as we receive from 
our tariff. Undoubtedly the party which has such a holy 
horror of "monopolies," of ''New England capitalists," of 
"thieving manufacturers," and would never protect except 
when the necessary revenue compelled it, would copy after 
this great free-trade model, and raise this revenue from tea, 
coffee, chicory, cocoa — upon whatever we must have and do 
not raise or make. With a strange inconsistency, however, 



THE TARIFF FRYE. 379 

they would collect forty -five millions annually from sugar, 
rice, and hemp, raised in the South, and therefore pro- 
tected without any violation of Democratic free-trade 
principles. If they undertook to raise the revenue by 
duties upon manufactured articles, those duties would neces- 
sarily be so low as not only to enable the foreign manufac- 
turer tt) compete with ours, but to undersell him, so as to. 
induce large importations and realize great revenues. The 
only way open to us for a continuance of employment would 
be a reduction in the wages of the employed. I have had 
some experience on the House Committee on "Ways and 
Means, and know what my Democratic friends mean by a 
"tariff for revenue only." 

I have no hesitation in declaring that a tariff for revenue 
only — that is, a tariff law under whose provisions the largest 
amount of revenue can be raised in the easiest manner for 
the Government — would be more disastrous to our people 
than free trade, for, while it would leave open and free com- 
petition to all countries in everything we raise or manufac- 
ture, it would increase the cost of those we cannot and yet 
must have, the factor of competition being left out. 

WHO ARE THE ADVOCATES OF FREE TRADE ? 

The only prominent champions of free trade to-day in the 
world are England and the Democratic party of the United 
States. Amazing co-partnership ! For centuries England 
was the most earnest, vigorous, and determined champion of 
protection the world ever saw, enforced the extremest doc- 
trines by all the powers of war and all the arts of diplomacy. 
She destroyed the growing commerce of Ireland with one 
blow of her navigation laws, repressed her cattle raising, 
her wool growing, her manufactures, and made her the waste 
of to-day. She attempted the same role in America; for- 
bade the exportation of her products to any country other 
than her own; forced all of the carrying trade into English 



380 THE TARIFF FRYE. 



bottoms ; repressed all manufactures of fabrics, and provided 
by law " that none of the American Colonies should manu- 
facture iron of any kind; that no smith should make a bolt, 
spike, or nail, bar or rod iron ; that no mill or other engine for 
rolling iron, or furnace for making steel should be permitted ; " 
finally drove us to revolution and lost the brightest jewel 
from her diadem. This spirit of repression in the interests 
of protection controlled her conduct with all of her Colonies. 
Nor did England confine this policy to them alone, but by 
every art and device known to war and peace she protected 
and encouraged her manufactures, strengthened and extend- 
ed her commerce at the expense of every nation she could 
frighten or cajole. By fraud, diplomacy, and war, by re- 
pression, protection, and prohibition resorted to for centuries 
with a persistency and determination which never wavered, 
England found herself ''mistress of the seas" and manu- 
facturer for the world. Then with an accumulated capital 
no other country possessed, with skilled artisans kept at 
home by laws forbidding emigration, with machinery far in 
advance of any other nation, with a merchant marine capa- 
ble of doing the carrying trade for the universe, with the 
key to the whole situation in her own hands, as she thought, 
England suddenly discovered the charms of " free trade," 
opened her own ports, and demanded reciprocity. Was this 
new light ? Had she found herself in the wrong during all 
these years of wonderful growth, and to do works meet for 
repentance, to repair the wrongs inflicted upon the other 
nations of the earth, did she determine upon this new pohcy? 
By no manner of means. She only counted herself able, 
with the advantages she possessed , to compete with the world 
successfully to herself — to hold her own markets and gain 
theirs. Well may she to-day, with her Cobden Club, and 
with every device of which she is so cunning a manipulator, 
join with the Democratic party in a crusade against our in- 
dustries. With her overflowing population, with a produc- 



THE TARIFF FRYE. 381 

tion one-quarter of which she cannot consume at home, with 
a third of her spindles idle, with protection against her 
manufactures in almost every country, even in her Colonies 
of Australia and Canada, well may she champion the cause 
of '<free trade" in this Republic with her fifty millions of 
people. To succeed and to accomplish her purpose would 
be the crowning glory of her great industrial career. 

Mr. Clay, in 1824 in the Senate, discussing the tariff said: 
'^ The existing state of things presents a sort of tacit com- 
pact between the cotton-grower and the British manufacturer, 
the stipulations of which are, on the part of the cotton- 
grower, that the whole of the United States, the other por- 
tions as well as the cotton-grower, shall remain open and un- 
restricted in the consumption of British manufactures; and 
on the part of the British manufacturer, that in considera- 
tion thereof he will continue to purchase the cotton of the 
South." 

On reviewing the great debates on the' tariff from 1824 
forward for ten years, it will be seen that Hayne, Hamilton, 
McDuffie, Wickliffe, Benton, Rankin, Garnett, Cuthbert, and 
others, leaders in the Democratic party, opposed the protec- 
tive policy on the ground that cotton was the king, and 
ought by right to be; from a desire for a market, a fear of 
retaliation if we protected against English manufactures, 
cheap food for the slaves, etc. 

One of their leading statesmen said: '' We must prevent 
the increase of manufactories, force the surplus labor into 
agriculture, promote the cultivation of our unimproved 
Western lands, until provisions are so multiplied and reduced 
in price that the slave' can be fed so cheaply as to enable us 
to grow our sugar at three cents a pound." 

Mr. Clay rebuked this strangely selfish spirit: " The gen- 
tleman would have us abstain from adopting a policy called 
for by the interests of the greater and freer part of the 
population. But is that reasonable? Can it be expected 



382 THE TARIFF — FRYE. 

that the interests of the greater part should be made to bend 
to the condition of the servile part of our population ? That 
in effect would be to make us the slaves of slaves." 

I have listened to many discussions of the tariff within 
the last ten years in Congress, and the animosity of the 
Democratic leaders toward protection has never been con- 
cealed. I give a few extracts from their speeches, indicating 
what tender nurses they would be for a tariff.. In 1866, 
Mr. Marshall of Illinois, a leading Democrat, member of the 
Committee on Ways and Means, speaking of the tariff, said: 
" In all ages of the world there has been an effort by legis- 
lative jugglery to rob the toiling millions, build up a favored 
class who could riot in unbounded wealth wrung from the 
hard earnings of labor." 

Again, he declares that " the Democratic party was organ- 
ized and formed to protect the people from such legislative 
robbery." 

Dr. Elliot, as I have shown, furnishes the key to this in 
his statement that it was organized to secure to the slaves of 
the South cheap food from the North. 

Mr. Marshall, in the same speech, calls the friends of the 
tariff «' plunderers," "robbers," and declares that the dignity 
of the House alone restrains him from speaking the whole 
truth. 

Hon. Mr. Kerr, subsequently Democratic Speaker of the 
House, discussing the same bill, says: " 1 arise for the pur- 
pose of uttering my solemn protest against the infamous and 
irreparable crime which this House threatens to perpetrate 
against the liberties of the people of this country by the 
passage of this bill." 

He also speaks of his protective policy as "vicious," 
of "protective-tariff swindles," of "our unwise, dishonest, 
and vicious protective system," "infamous system," and 
concludes his speech, " if our country is ever to become 
prosperous and happy again, it will be after a return . . . 



THE TARIFF FRYE. 383 

to the rational revenue system of her better days," meaning, 
I suppose, that system which was to make the North a great 
feeder of slaves. 

Senator Hamilton, in the forty-second Congress, said of 
protection: " It is a firmly formed, rotund, impressive, seduc- 
tive word, gaudily, nay richly, attired, veiled even as the 
Prophet of Khorassin, but when stripped presents features 
narrow and contracted, repulsive, with low cunning, morbid 
selfishness, base instincts. There is nothing in it broad, 
nor good, nor benevolent, nor liberal." 

Said Mr. Crossland: ^^God speed the day when all the 
doors of commerce shall be thrown open, all its shackles 
knocked off, and all the nations of the earth invited to come 
into our ports — to bring to our markets their manufac- 
tures free of taxation, and bid against each other for our 
products." 

Senator Johnston of Virginia: " Sir, I am opposed to this 
protective system; I favor free trade." 

And this is the honorable Senator's definition of protec- 
tion I " It is a cunningly-devised scheme, by which a por- 
tion, and but a smaU portion, of the community, under the 
pretense of raising revenue for the support of the Govern- 
ment, get rich at the expense of a large majority of the 
people." 

Mr. Lamison, of the House, declared his belief in free 
trade, and said: ''The prosperity of the country will be 
increased if all our ports are thrown open and the commerce 
of the world is invited to unload its cargoes without the pay- 
ment of one doUar of duty." 

In a tariff discussion, in 1880 Messrs. Morrison, Cox, and 
Mills declared themselves ''free-traders." 

Hon. Mr, Muldrow talked about protection having ''its 
iron fingers on the throat of every man." 

Hon. Mr. Tucker of Virginia said : "The lowest rate of 
duty on every article which will produce the required 
revenue is my idea of a revenue tariff." 



384 THE TARIFF — FRYE. 

Hon. Mr. McKenzie of Kentucky said : '' This tariff 
system was conceived in sin and brought forth in iniquity. 
It derives its name from Tariffa, where, during the Moorish 
domination in Spain, exactions from every passing vessel 
were made. Our American system . „ . is as downright 
and unquestionable robbery as it was on the part of the 
Moors to extort tribute from the unlucky merchant." 

And I might go on with such morsels for the day, but it 
seems to me here is enough to satisfy any man that it will 
not be a prudent and judicious act to put our protective 
policy out to the tender care of such a wet-nurse as this. 
How strangely alike are the discussions of that earher day 
and these of the last ten years, the same fearful prophecies 
of woe to the land, of destruction to the country, of sorrow 
to the poor, of starvation to the laborer, if protection 
prevailed. 

A protective tariff prevailed, too, notwithstanding the 
denunciations and evil prophecies of these latter-day Demo- 
cratic saints, and what followed ? I let Dr. Loring, Com- 
missioner of Agriculture, in a speech recently made at 
Boston, reply : " This Republic has increased in population 
at the rate of a million a year during the last decade, rival- 
ing now every country in the world except Russia. It is 
not necessary to go back a half a century, or even twenty- 
five years, to obtain the most gratifying evidence of our 
progress in the work of tilling the soil. But starting in 
1870, at which time we had reached an enormous production 
in proportion to our population, let us make our comparisons 
with the returns of 1880. In 1870 the amount of cotton 
produced was 4,352,317 bales; in 1880 more than 6,000,000 
bales. In 1870 the amount of Indian corn raised was 
760,940,594 bushels; in 1880, 1,754,449,435 bushels. In 
1870 the wheat crop was 287,745,626 bushels; in 1880 it 
was 459,667,022 bushels. In 1870 the crop of oats reached 
282,107,157 bushels; in 1880, 407,859,033. In 1870 the 



'HE TARIFF FRYE. 386 



tobacco crop amounted to 262,735,341 pounds; in 1880 it 
amounted to 473,107,573 pounds. The increase of agricul- 
tural products was nearly one hundred per cent, in these ten 
years, and in the last year of this decade, from 1879 to 1880, 
out of this vast increase of our crops and products, our 
cattle export rose from $13,000,000 to $14,000,000; corn, 
from $43,000,000 to $50,500,000 ; wheat, from $167,698,- 
000 to $190,546,000; flour, from $35,000,000 to $45,000,- 
000; cotton, from .$209,852,000 to $245,534,391; beef, from 
$7,000,000 to $12,000,000; lard, from $28,000,000 to $33,- 
000,000; and pork, from $5,000,000 to $8,000,000. Mark 
also the growth of American manufactures in half a century. 
In 1830 the amount invested in cotton manufactures was a 
little more than $40,000,000. Fifty years have passed away 
and the amount of capital invested in mills and subsidiary 
work is more than $225,000,000. Of our woolen manufac- 
tures the statistics are more imperfect, but I have ascertained 
that in 1840 the value of the product was $20,696,699, and 
in 1880 the value of woolens, worsteds, carpets, and hosiery 
produced was $234,587,671. In 1870 the silk productions 
of the United States were valued at $12,210,662; in 1880, 
at $34,410,463. Fifty years ago the shoe and leather indus- 
try had hardly a national reputation. In 1870, however, 
there were 4,237 tanneries in the United States, employing a 
capital of $42,710,505 annually, and producing leather 
valued at $86,169,883. The growth of the iron and steel 
industry has been equally remarkable. In 1810 we pro- 
duced only 50,000 tons of iron, and our largest furnace 
could yield only 1,100 tons annually. But in 1830 the 
product was 165,000 tons; in 1860, 1,000,000 tons; in 1880 
the iron and steel works in the United States produced 
7,265,100 tons. 

'•The aggregate annual product of our manufacturing 
and mechanical industries is now more than six thousand 
millions of doUars. Of this vast product less than two 
17 



386 THE TARIFF FRYE. 

hundred millions are exported. And of the nine hundred 
milhons produced by agriculture, less than ten per cent, is 
exported. On the self-supporting power of the American 
people, and of the mutual relations existing between our 
industries, we can d.well as Americans with the most pro- 
found satisfaction." 

The wildest enthusiast for protection in 1824 never 
dreamed of any such marvelous progress in industrial pros- 
perity as this. I have referred to two eras of protection, 
and the unparalleled prosperity of both no man can gainsay. 
I know that free-traders tauntingly point to 1873, its panic 
and subsequent hard times. But what had that to do with 
protection ? Its causes are familiar to every Senator, and I 
do not propose to enter upon a discussion of the war, an 
inflated currency, wild speculations resultant to it, and to 
the other causes common to other countries and ours. Why, 
free-trade England was worse off than we. More than half 
of her spindles were idle ; half of her workingmen were 
out of employment, and she was feeding more paupers than 
ever before. Suppose we had had no protection against her 
then! She would have poured her surplus products into 
our markets, our manufacturers would have been hterally 
crushed, and it would have taken many years for recovery 
of our position. History repeats itself. Our periods of 
prosperity have been the years of protection, and of adver- 
sity those of free trade ; and by free trade I mean a tariff 
for revenue only. In 1 789-180 T we had protection; in 
1801-1812, free trade; in 1812-1816, protection; in 1816- 
1824, free trade; in 1824-1833, protection; in 1833-1842, 
free trade; in 1842-1847, protection; in 1847-1861, free 
trade; and in 1861-1881, protection again. 

Take, for an example, those good old Democratic times 
from 1847 to 1860. That party found the country when 
they took it in a condition of healthy prospeiity, placed it 
promptly under a tariff for revenue only, held it for twelve 



THE TARIFF — FRYE. 387 



years, left it in debt, with its Treasury bankrupt, unable to 
borrow a few millions even for twelve per cent, interest, its 
industries almost destroyed, its courage completely paralyzed. 
The Republican party received it in this condition, placed it 
as promptly under a protective tariff, carried on a four years' 
war, raised billions of dollars by taxation, other billions by 
bonds, paid its debt for years at the rate of one hundred 
millions a year, reduced the rate of interest to three and a 
half per cent.,, and liave it to-day in the most prosperous 
condition it ever enjoyed. When, in the history of this or 
any other country has free trade proved a blessing ? Now 
and in England, every free-trader cries. But I have already 
tried to show that she never could have experimented with 
what she calls free trade if she had not first achieved great- 
ness and power under protection. But what are the facts ? 
Is England prosperous to-day ? 

That the English people are thoroughly aroused to-day on 
this vital question of protection I think no man will deny, 
and it is my firm belief that the English workingman will, 
before ten years have passed, have compelled the Govern- 
ment to renounce its free trade and adopt protection. 

The only country in the world I know of that has thor- 
oughly free trade forced upon her by compulsory process is 
that most distracted and unfortunate land, Ireland. Before 
the union her manufacturing industries were protected 
against England by duties on woolens, silks, cotton, yarn, 
and twist, and cotton manufactured goods. Her calicoes 
and muslins were protected by a duty almost prohibitory, 
and Ireland was rapidly becoming a successful manufactur- 
ing country. Her people were happy, contented, industrious, 
and prosperous. There was a loom in almost every house, 
and with it comfort came, too. Her linens were known and 
appreciated all over the world, and her silks were gaining a 
ready market. There were in 1800, as appears by an im- 
perfect census then taken, over 8,000 weavers employed jJO. 



388 THE TARIFF FRYE. 

Cork alone, over 5,000 manufacturing woolen goods in 
Dublin, 3,000 making blankets in Balbrigan, 2,000 weaving 
calicoes in Wicklow, 1,000 making flannels, while the num- 
bers engaged in linen work were immense. This linen trade 
was encouraged by subsidies, but they were gradually with- 
drawn until all protection ceased in 1826. In 1825 more 
than thirteen million of dollars were expended in the pur- 
chase of coarse, unbleached, home-made webs of linen. 
What a power of good, of comfort, and of happiness, those 
home-made webs revealed. England, not content with de- 
stroying Ireland's navigation, with crushing out, in the 
earlier days, her manufacture of woolens, greedy to manu- 
facture for the world, determined that the rest of mankind 
should raise the raw materials to feed her hungry iooms, as 
the South wanted us to feed their slaves, beguiled poor 
Ireland into assenting to the act of the union, imder the 
terms of which every duty was repealed — some gradually, 
to be sure, but certainly. The act continued the tariff on 
woolens for twenty years, terminated it on calicoes and 
muslins in 1821, on cotton yarn and twist in 1816, withdrew 
all subsidies in 1826, and Ireland enjoyed the benefit of 
absolute free trade. What was the result? England held 
both ends of the bargain. Ireland could raise in her fertile 
soil the raw material. England could make it into goods 
cheaper than she could, but Ireland had no voice in the price 
to be paid for either. In 1840, another census was taken, 
and there were 500 blanket-makers in Kilkenny, 200 silk- 
weavers in Dublin, no carpet makers in all Ireland, no linen- 
weavers m Cork, 300 operatives in that city in all the manu- 
facturmg industries, where fifteen years before there were 
8,D00 weavers alone. 

Free trade had done its work and Ireland was starving. 
She is the only absolutely free trade country in the world to- 
day, the only land enjoying its rare privileges in complete 
fullness, and what a commentary it affords with a good 



THE TARIFF — FRYE. 389 

climate, a fertile soil, great rivers, splendid water-power, 
broad, safe bays and harbors, an abundance of minerals, an 
industriously -inclined people, it is the most terribly vexed, 
troubled, suffering, distracted, impoverished, starving coun- 
try in the world. Irishmen, loving their land earnestly and 
with more unbounded enthusiasm than the men of any 
other country, have been driven into exile by the millions. 
Now, I do not blindly charge all of her woes to free trade 
alone; land tenure has to answer for a portion, not for more 
than half. Give her a parliament of her own, and the first 
act passed would be a protective tariff, and in twenty years 
from now the exiled Irishman would return to the land he 
loves and find it peaceful, contented, and prosperous. Eng- 
land, for her own selfish purposes, fastened these two fearful 
leeches upon her, and they have been fattening on her blood. 
England and her ally, the Democratic party, are undertak- 
ing to fasten free trade upon us, and, strange to say, nine- 
tenths of our citizens of Irish birth, starved out of home 
and driven here into exile, go every year to the polls and 
vote with England's Democratic ally for free trade ! 

THE EFFECT OF THE TARIFF UPON THE PRICE OF MANUFACTURES. 

Mr. President, the Senator from Kentucky [Mr. Beck] 
and all advocates of free trade, or tariff for revenue only, 
insist with great vehemence that our tariff enhances the cost 
of everjdihing. The facts fail to justify the declaration. 
Allow me to give a few illustrations. In 1860 we had a 
tariff for revenue only, wages from forty to sixty per cent, 
less than now, all kinds of business dull, no demand for 
goods; while in 1880 we had the "robber tariff" and an 
active demand. 

There is not a fabric in the whole list that is not cheaper 
to-day in the markets than it was under the '' tariff for rev- 
enue only." It is an ascertained fact that our army to-day 
is clothed cheaper than any in the world, quahty of the cloth 
considered. 



390 THE TARIFF — FRYE. 

Take iron used in sMp-bnilding. From 1850 to 1860 we 
paid for ship or tank plate, 4 cents per pound; flange-iron, 
5 cents; angle-iron, 3f cents; rivets, 5 cents; average, 4-J- 
cents. From 1870 to 1880 we paid for ship or tank plate, 
2^ cents per pound; for flange-iron, 4 cents; angle-iron, 2i 
cents; rivets, 4^ cents; average, 3f cents. 

STEEL EAILS. 

We commenced their manufacture in 1865, and since then 
have made four and one-half millions of tons. In 1864 we 
paid for English steel rails from $80 to $112 in gold per 
ton, dehvered at English seaports; in 1877 the prices in 
England ranged from $72.50 to $77 a ton, while we, since 
1870, as appears in the testimony before the House Com- 
mittee on Ways and Means during the last Congress, have 
sold more than one million tons as low as $55 a ton, and in 
1877 they run down to $40, Even now, with the tremen- 
dous demand, they are sold for from $60 to $65. It must 
be remembered that there never was so great a demand for 
rails as during the last twenty years. Since 1861 we have 
built 65,000 miles of railroad, and during the last two years 
more miles than during the ten from 1850 to 1860, under 
the low tariff. 

The tariff stimulates production and cheapens price. Let 
me illustrate this with a few examples. Take the manu- 
facture of pottery. In 1860 there were about two thousand 
men engaged in making pottery. The industry was strug- 
gling for an existence. In 1870 there were over six thou- 
sand; in 1880, probably twelve thousand; in 1860, the 
capital invested was about one million and a quarter; in 
1870, five millions and a quarter; in 1880, probably double 
that amount. The census of 1880 has not been so com- 
pleted as to enable me to be exact. 

To-day there are pottery establishments in every State in 
this Union except Florida. Let it be remembered that in 
this industry the manufactured article represents more than 



THE TARIFF FRYE. 



391 



ninety per cent, of labor; that the wages in Europe are con- 
siderably less than one-half of those paid here. Return to 
free trade, and no pottery manufactory could run for six 
months. "What has been the result as to prices? Pottery 
sells to-day in the United States for thirty per cent, less than 
it did in 1860. 

Take worsted goods, the creation entirely of our protective 
tariff, and silk goods also. Read these instructive tables 
taken from the census. See the wonderful growth of both 
industries, the number employed, the annual wages paid of 
$15,000,000, and then tell me, is protection destroying the 
country? 



Year. 


Numl)er of 
establish- 
meuts. 


Number of 
laborers. 


Capital 
invested. 


Wages paid. 


Silk manufactures:. 
1860, 


139 

86 
290 

3 
102 

75 


4,535 

6,649 

34,440 

2,378 
12,920 
18,773 


$2,926,980 

6,231,130 

15,394,700 

3,230,000 
10,085,778 
20,411,043 


$1,050,224 
1,942,286 
9,107,835 

543,684 

4,368,857 
5,645,681 


1870 


1880, 


Worsted goods: 

I860 


1870, 


1880, 





And yet both silks and worsteds are selling for consider- 
ably less now than under the ''tariff for revenue only." 

How is it, Mr. President, that the tariff, seemingly a tax 
upon manufactures, cheapens instead of enhances the price? 
Ireland could answer that understandinglyo She learned 
by bitter experience how much the price of raw material 
was reduced when obliged to sell it to England, and how 
much the value of goods made from it was enhanced when 
forced to buy it back manufactured, the factor of competi- 
tion expelled. Worsted goods illustrate. Twenty-five years 
ago we made none in this country, and the prices were 
extravagantly high. In 1862, encouraged by the high tariff, 
we started a dozen establishments. In 1880, they had 



392 



THE TARIFF FRYE. 



grown to seventy-five, with a capital of more than twenty 
millions of dollars. They were rival establishments, com- 
peting with each other for the markets, each striving to 
reduce the cost without cutting down the wages. So they 
appealed to the inventive genius of the country, levied con- 
tributions upon that, and it responded wonderfully with 
machinery marvelous in its ingenuity, power, and capacity. 
And so, year by year, the cost of the cloths was reduced, 
not only here, but abroad. And such has been the history 
of the result in every industrial enterprise started here. 
The Senator from Kentucky [Mr. Beck] talks about the 
monopolies of New England. Why, sir, there is not a 
monopoly in New England; not one. There is not a busi- 
ness carried on there which is not open and free to any man. 
The only monopoly I know of in this country is a great 
railroad without any competing line. 

HOW DOES THE TAEIFF AFFECT FAEMEES ? 

The Senator from Keijtucky [Mr. Beck] insists that the 
manufacturing interests have been promoted at the expense 
of agriculture; that our farmers have been taxed, ay, robbed, 
for their benefit. A serious charge; but is it true ? What 
are the facts ? The manufacturing industries have prospered 
and increased amazingly during the last twenty years, but 
the progress in agriculture has been marvelous, far out- 
stripping them all. The census is yet incomplete, but the 
following is gathered from it: 

The following are the wheat, corn, and oat crops in 
bushels during the following years: 



Year. 


Wheat. 


Corn. 


Oats. 


1839, 


84,823,272 
100,485,444 
173,104,924 
287,740,626 
459,479,505 


377,531,875 
592,071.104 
538,792,742 
760,944,549 
1,756,861,535 


123,071,341 


1849, 


146.584,179 


1859 


172,^43 185 


1869 


282,107,157 


1879, 


407,858,999 







THE TARIFF FRYE. 393 

Barley increased from 4,000,000 bushels in 1839, to 
40,000,000 in 1879. Twenty years ago there were in the 
country 23,000,000 of sheep; in 1880, 42,000,000. Then 
the clip of wool was 60,000,000 lbs. ; last year, 230,000,000. 

Nor, Mr. President, is the farmer left without protection. 
The duty on animals is twenty per cent. ; bacon, two cents 
a pound; beef, one cent; buckwheat, twenty per cent. ; but- 
ter, four cents a pound; cheese, four cents; corn, ten per 
cent.; hay, twenty per cent.; oats, ten cents a bushel; pease, 
from ten to twenty per cent.; potatoes, fifteen cents a 
bushel; rye, fifteen cents a bushel; sheep, twenty per cent.; 
wheat, twenty cents a bushel, etc. 

Besides, Mr. President, are the five millions of workers in 
iron, copper, of cotton and wool, with five millions more 
dependent upon them, all consuming and producing nothing 
the farmers raise, no protection to them? Adopt free trade, 
destroy manufacturing, make these men producers instead of 
consumers, and would not our farmers harvest ruin from 
the change? 

It seems to me that in my own State we have a wonder- 
ful illustration of the benefits of protection. Aroostook 
County, situated in our extreme northeast, with only one 
railroad outlet, and that through the Canadian provinces, 
with fertile lands but long winters, its only business agri- 
culture and lumbering, inclosed on two sides by th'e Domin- 
ion of Canada, where everything from the farm can be 
raised cheaper than in the States, shows by the last census 
how agriculture has been "robbed" by protection and 
farmers sacrificed to manufacturers. The percentage of the 
growth of population from 1860 to 1880, is eighty-five per 
cent., the percentage from 1870 to 1880, being forty-one per 
cent. A comparison of the agricultural products of that 
county, as returned in the two censuses of 1870 and 1880, 
being the crops of the years 1869 and 1879, shows the fol- 
lowing percentage of increase: 
17* 



394 THE TARIFF — FRYE. 



Per cent. 

Tons of hay, 69 

Irish potatoes, 490 

Value of orchard products, 17 

Pounds of wool, 121 

Dair}^ products -' (milk, butter, cheese), 83 

Cereals: 

Bushels of barley, .' 233 

Bushels of buckwheat, „ 82 

Bushels of Indian corn, 9 

Bushels of oats, ' 18 

Bushels of rye, 327 

Bushels of wheat, 194 

A comparison of the statistics of live stock on farms as 
returned in the two censuses of the years 1870 and 1880, 
shows the following percentage of increase : 

Per cent. 

Horses, 79 

Mules and asses, 10 

Milch-cows, 73 

Other cattle, 68 

Swine, 65 

Sheep, 175 

Working oxen, 34 

It produces millions of bushels of potatoes, the best in the 
world, but ordinarily, if forwarded to the markets, the long 
distances on bad roads running through a foreign country, 
they would hardly be worth the raising. Here the tariff, 
that <' robber," comes to their relief, by laying a duty of 
twenty per cent, on potato starch, starting up starch-factories 
over the country, accessible to all, and easily taking their 
surplus crop at fair prices. So the country during the last 
ten years has been steadily growing in prosperity, her 
farmers getting out of debt, making improvements, clear- 

* All tHe products of the dairy in the above computation were reduced to but- 
ter, on the basis of three gallons of milk, or two and one-half pounds of cheese 
to one pound of butter. 



THE TARIFF — FRYE. 395 



ing up new lands, building great barns and comfortable 
houses, supplying for their families not only the necessaries 
of life, but indulging them in its luxuries, I had the pleas- 
ure of traveling through it last season, and found it in all 
things a marvelous creation, as I believe, of a protective 
tariff. 

Mr. President, we grow rich and powerful under protec- 
tion, and yet we have free trade more absolute and abund- 
ant than all the rest of the world between thirty-eight States 
and nine Territories, stretching from the Atlantic to the 
Pacific Ocean, from the Dominion of Canada to the Gulf 
of Mexico. That internal trade last year amounted to 
eighteen billions of dollars, six times greater than the 
export and import trade of Great Britain. I have used 
figures from an article in the last International Review^ en- 
titled "Influence of European Industries on the United 
States," by J. L. Stevens. Mr. Stevens is our minister- 
resident at Stockholm; has been in Europe for many years, 
is a man of ability,' experience, and extended information. 

I commend the article as one replete with valuable infor- 
mation, and take the liberty of quoting his opinion, gathered 
from long and careful observation: " It was the imperative 
need of the United States for revenue, and the require- 
ments of our national resources and of our internal trade, 
which caused our statesmen at a great national epoch to 
adopt our present tariff policy. Fortunate it was that our 
imperative revenue needs to sustain national existence and 
national faith conformed so completely to the internal wants 
of the country's resources in respect of development. By 
it our national unity was mamtained agamst titanic assaults 
within and great perils abroad. By it our national honor 
has been kept untarnished, and now shines with '^purest 
ray serene" in the financial markets of the world. The 
solid fact — the ripe fruits from the vigorous tree of expe- 
rience — give irresistible testimony m its favor. In less 



396 THE TARIFF FRYE. 

than twenty years the entire property of the country has 
increased from $16,000,000,000 to nearly $38,000,000,000, 
though in that time $4,500,000,000 were lost to the country's 
wealth by the war. The manufacturing power and products 
of the country have nearly tripled, the United States -at 
this time turning out cotton and woolen fabrics more than 
one-fifth as much as entire Europe, while possessing less 
than one-sixth as much population. Our entire manu- 
factures of all kinds are equal to one-fourth of the total 
produced by Europe. In the same period we have built 
more than sixty thousand miles of railroad, and since 1865 
have paid off $800,000,000 of national debt, and reduced 
our annual interest on the same to the extent of $70,000,- 
000. In the same time, of less than nineteen years, our 
home commerce has augmented threefold, our foreign trade 
has largely increased, and our financial power and prestige 
in the commercial centers of the world stand far higher than 
they stood twenty years since." 

Mr. President, how wonderfully applicable to our country 
now after twenty years of protection is that beautiful picture 
drawn by Mr. Clay after the seven years of the tariff bearing 
his name. The only figures we miss are ^'the overflowing 
Treasury" and "our tonnage swelled and fully occupied." 
The deficiency from the picture of ^' the overflowing Treas- 
ury " I shall not attempt to account for, lest I might be 
accused with trying to rake open the dying embers of inter- 
necine strife; but the Senator from Kentucky [Mr. Beck] 
compels me to consider briefly the "■ tonnage swelled and 
fully occupied," for he declares with emphasis that the war 
had nothing to do with the destruction of our commerce, 
that protection is answerable for it^ — a most amazing assertion 
in the light of history! From 1850 to 1860, England, having 
found that she could not compete with us in building wooden 
ships, that she was handicapped with want of material, was 
compelled to freight it thousands of miles, that we were not 



THE TARIFF — FRYE. 397 

only outstripping her in the race, but were selling lier hun- 
dreds of thousands of tons of shipping every year, tried 
the experiment of iron steamships, found them a success, 
changed from side-wheelers to propellers, from the ordinary 
high-pressure engine to the compound, increasing the speed 
and saving nearly one-half of the coal. Proudly indifferent 
from our success, we made no such experiments, traveling 
in the old pathway until we found ourselves in the midst of 
a fearful war. In July, 1861, the Sumter destroyed the ship 
Grolden Rocket. At this time our ships were in every sea, 
in all the ports of the world, freighted with the productions 
of every country, bearing the fortunes of thousands of our 
citizens. The intense alarm of our merchants and ship- 
owners can at this late day hardly be realized. Whither 
could our scattered ships flee for protection ? The wing of 
the Government was powerless to cover them. ' English 
ship-yards became busy, and the Florida, the Alabama, the 
Georgia, the Tallahassee, the Chickamauga, and the Shenan- 
doah, built in these yards, equipped, provisioned, and manned 
in English ports, were soon preying upon American com- 
merce. The destruction of our shipping was immediate and 
the effect upon our commerce terrible. For years we had 
been increasing our ocean tonnage immensely — from 1830 
to 1840, sixty per cent.; from 1840 to 1850, seventy-five per 
cent.; from 1850 to 1860, sixty per cent., and in 1861 had 
reached our highest point, having afloat 2,700,000 tons, and 
occupying the second place among the nations of the earth 
in the extent of ocean tonnage. A few years more of such 
advance would have given us the proud position of mistress 
of the seas. England, saw this, feared it, and these cruisers 
were only doing her will. From 1861 to 1866 more than a 
million tons of this shipping was lost to us ; more than one 
hundred thousand were burned by English cruisers, sailing 
under the confederate flag, and more than nine hundred 
thousand sought protection under foreign flags^ principally 



398 THE TARIFF — FRYE. 

under tliat of England, The value of that remaining was 
crippled by the perils of the cruisers, the risk of sailing 
under our flag being so great as to drive a large proportion 
of the carrying trade into foreign bottoms. Our prestige 
was gone, our commercial power broken, and England was 
without a rival. Who can estimate the gain to her acquired 
by her wrong to us, a wrong she subsequently admitted 
and partly atoned ? During the war, with all our energies 
directed to the saving of the nation, we saw her take nearly 
all of our carrying trade, and were utterly powerless. For 
two or three years after we were examining our accounts, 
balancing our books, restoring the Union, providing for a 
debt so enormous as almost to daze the people, and she still 
held her advantage. Without any of the advantages we 
had in 1850, with the disadvantages of heavier taxation of 
ships, of a tonnage improperly measured and taxed, of 
municipal assessments upon the vessel's value, while Eng- 
land assesses only on net earnings, with heavier port charges 
than she pays in foreign ports, with higher wages of officers 
and seamen, still there was a door we might have opened 
for the recovery of our carrying trade, and we never opened 
it. For the last ten years we could build iron steamships 
as good and almost as cheaply as she; but to do this, and 
to establish lines to compete with those already established, 
required immense capital, and the necessary capital needed 
encouragement. If we had paid our steamships for carry, 
ing our mails to foreign countries as much in proportion as 
we paid the steamboats for carrying them on the Mississippi 
River, or the stages for the same service across the prairies, 
we to-day should have been far advanced on the highway 
of recovery. If we had followed the examples of England, 
France, Germany, and, indeed, of any of the European 
powers, our iron steamships would to-day be plowing their 
seas. But we have been frightened out of oui' usual wits 
by the cry of " Wolf." We lost our carrying trade by the 



THE TARIFF FRYE. 399 

war, and have not taken the first step since the war closed 
to recover it. Now, pray, what had the protective tariff to 
do with it ? How could it affect it other than by reducing 
our exports and imports? But it has not reduced them. 
They have been surely and steadily increasing from $687,- 
192,254 in 1860, until last year they reached the enormous 
sum of $1,613,770,633. 

No, Mr. Senator, not protection, but war did the mischief; 
folly and cowardice have prevented all reparation. In the 
earlier days of the Republic, when England undertook to 
weaken our growing power on the seas, to defend it we 
declared war, expended $150,000,000 and thousands of 
precious lives; m the latter, when the same England, taking 
advantage of our distracted country wickedly and selfishly 
succeeded in accomplishing what she ignobly failed in before, 
we allowed her to triumph, lest the representatives of the 
people should, forsooth, be taunted with voting for subsidies. 
But, sir, a discussion of the question of the restoration of 
our ''swelled tonnage" of the past is hardly legitimate to 
the measure now under consideration, and I refrain, simply 
asserting that Senator Beck's method of restoration is utterly 
delusive; that free trade in ships, the repeal of our naviga- 
tion laws, could not possibly have any result other than the 
immediate closing of every ship-yard in the country, the 
entering into other trades of all of our skilled workmen, 
the placing of our country at the mercy of England in 
event of war, and the complete surrender of our coastwise 
trade. 

Mr. President, I have endeavored to show that the doctrine 
of free-trade sprang from a selfish and unworthy purpose ; 
that while marvelous changes have been wrought in our 
country, slavery abolished, labor elevated, industries devel- 
oped and multiphed, the Democratic party still adheres to 
the dangerous heresy; that free trade is antagonistic to our 
institutions and to our civilization; that its adoption would 



400 THE TARIFF — FRYE. 

necessarily degrade our workmen, reduce their wages, and 
have a tendency to unfit them for American citizenship; that 
protection has invariably brought us prosperity, increased 
wages, decreased cost of manufactures, and furnished a 
ready market for our farmers; that the best interests of all 
our people will be secured by a continuance of this the 
Kepublican policy. But, sir, I recognize as an important 
factor in this that our tariff laws must be harmonious, just, 
and equitable, and that the existing law does not in all 
respects answer this demand. Since the distinguished Sena- 
tor from Vermont [Mr. Morrill] gave it to the country, 
so-called amendments have been made to it from time to 
time, some healthy, some unhealthy. The condition of busi- 
ness, the requirements of trade, the necessities of the people 
have changed; the rulings of the Treasury Department have 
modified its terms; there are excrescences that ought to be 
removed, rates too high that should be reduced, and m some 
instances too low, requiring raising; some articles now free 
should be taxed, and many now taxed should be made free. 
What is the best method of procedure ? I have taken part 
in the House of Representatives in two revisions of the 
tariff, and in the Committee of Ways and Means in one 
attempted. This experience determines me in favor of the 
pending bill providing for a commission. 

Mr. President, I thank the Senate for its indulgence. 



CHAPTER XXIII. 

NECESSITY AND BENEFITS OF THE SPEEDY 
REDUCTION OF TARIFF TAXATION,* 

By Hon. D. A. Wells. 



I DO not propose to occupy any time this evening in dis- 
cussing the tariff from the standpoint of theory, or 
abstract principles. Protectionists are never weary of assert- 
ing that only theorists, book-worms, college professors, and 
persons corrupted by British gold and foreign influences 
advocate free trade for the United States ; that it is not prac- 
tical,, or, as that eminent statesman, Warner Miller, when 
taking the chair of a Protectionist Convention some time 
since, expressed it when he said: *^ We plant ourselves on 
protection as a matter of fact. The professors tell us that 
free trade is perfect in theory, but it can't be applied to us. 
It would not correspond with the facts.'' And this idea, 
sedulously inculcated and reiterated for many years, has 
undoubtedly taken deep root in the minds of our people and 
formed the basis of a prejudice, which more than almost any 
other one agency has hitherto contributed to oppose the 
growth of hberal commercial sentiments in this country. 
But be that as it may, the time has now fully come when the 
friends of free or freer trade in this country may boldly and 
profitably challenge and meet the Protectionists on their own 
ground, and discarding for the time being all reference to 

♦This speech of the Hon. D. A. Wells was delivered in the Cooper Institute, 
l<tew York city, Nov. 22, 1883. 

(401) 



402 REDUCTION OF TARIFF TAXATION. 



political economy and philosophical theories, discuss before 
the American people the question of the tariff and its reform 
from the exclusive standpoint of our experience and the 
actual and prospective industrial and financial condition and 
necessities of the country. 

And first in the order of such experience is the fact, 
which even those who take but the smallest interest in this 
subject are beginning to recognize, that owing to our great 
natural resources, our rapidly increasing population, the 
increased use and power of machinery, and the energy of 
our people, the power of domestic production continually 
tends to be, and in most departments of industry is, far in 
excess of the power of domestic consumption. In the case 
of agriculture the fact is so obvious that no confirmatory 
evidence is necessary; but, if any is needed, it is all sufficient 
to call attention to the enormous surplus of food and cotton 
which which we now export to other countries, and to the 
circumstance that these exports during the last ten years 
have increased out of all proportion to any increase of home 
population. And in respect to our so-called manufacturing 
industries, it is only necessary to refer to the general com- 
plaint that business, though large (as it necessarily must be 
to supply the needs of a nation of 56,000,000) is, through 
excessive competition, conducted with little profit; that a 
very large percentage of that small part of our manufactures 
which can be subjected to foreign competition and which 
have been stimulated by high protection has either suspended 
wholly — like many of the iron furnaces and rolKng mills, or 
have in a measure curtailed production without avoiding 
heavy losses — hke those of cotton, wool, and silk ; that man- 
ufacturers in certain lines of the two last named articles 
especially, have only been able to dispose of their surplus 
stocks by forced sales at auction and at prices less than the 
cost of production; that failures and fires (the latter the 
inevitable indicator and concomitant of bad times) are 



REDUCTION OF TARIFF TAXATION. 403 

increasing at a rapid and alarming rate ; tliat tlie wages of 
manufacturing operatives almost everwliere throughout the 
country are undergoing extensive and, as the manufacturejrs 
claim, necessary reductions, while the purchasing power of 
wages is not increasing in any equal measure; that the 
opportunities for employment are conjointly becoming 
limited; and, finally, that artisans especially imported from, 
foreign countries to work in certain employments (e. g.^ glass 
making) in the United States are returning to Europe, with 
a view of bettering their condition. And lest I be accused of 
exaggeration in my statements, I would here ask attention 
to the following letter, written under date of Sept. 24 to the 
New York Tribune, by Andrew Carnegie, the well known 
iron maker of Pittsburg, in which he says: 

•'Much as I regret to say it, I believe that matters will 
grow worse for some months before manufacturing interests 
can reach a profitable business. A much more decided cur- 
tailment of production must take place before there can be 
any improvement. This will be brought about naturally by 
the prevalence of such ruinous prices as will compel manu- 
facturers to stop producing goods in advance of the country's 
needs. But as great loss is entailed by curtailment of 
production, the works are kept running to their full capacity, 
although prices have fallen to figures which leave even those 
manufacturers who have unusually favorable facilities little 
or no profit, and entail a positive loss upon the average 
manufacturer. I think the wages paid at the (iron) mills on 
the seaboard of the United States to-day are about as low as 
men can be expected to take. In the West, notwithstanding 
a recent agreement of -the men to accept a reduction of thirty 
per cent., it now seems probable, from the very unsatisfactory 
outlook, that they will have to be asked to work for still less." 

And since this was written more iron and steel works 
have suspended operations, and more men have been thrown 
out of employment, and wages have been still further 
reduced. 



404 EEDUCTION OF TARIFF TAXATION. 

WHY BUSINESS IS DULL AND UNPROFITABLE. 

Now I tliink all will agree with me that this is a most 
anomalous and curious condition of affairs. If there had 
been any recent and extensive failure of our crops; if the 
world no longer wanted the useful things which we produce, 
if the skillful hands of our citizens had lost their cunning; 
if other and competing countries had all at once acquired 
any superior advantages over us, any one or all these causes 
might be given in explanation of what we are now experi- 
encing. But none of these things have happened; and in no 
other country is there anything of an exactly .similar charac- 
ter occurring. But curious and anomalous as is the situation, 
it is only what might naturally have been expected from 
existing circumstances. Thus, it needs but a superficial 
glance at our tables of exports to see that, comparatively 
speaking, we have but little other than the domestic market, 
and not the whole of that, for- our vast and varied manufac- 
tured product — the ratio of exports for the years 1879-80 
being only 12.5 of manufactured to 87.5 of manufactured 
commodities, or $102,249,000 of the former to $721,700,000 
of the latter. And to make up even this beggarly twelve 
per cent, it was necessary to count in lumber, coal, and 
leather as manufactured exports. 

Now it simply stands to reason that if the manufacturing 
industries of the United States are to be mainly limited to 
the requirements of a domestic market, that their growth 
must be also limited, and far below their normal capacity 
and tendencies; and if, under such limitations and arrest of 
industrial development, we also have, as is the case in many 
departments, more capital and labor engaged in production 
than is necessary to supply any current demand— three 
mills, furnaces, or factories, for example, where only two are 
needed — then as inevitable and necessary consequences, there 
will be disastrous reductions of prices through excessive 
competition for a market; the extensive curtailment or arrest 



EEDUCTION OF TARIFF TAXATION. 405 

of manufacturing operations; the discharge and distress of 
operatives, and a failure of all those who are not financially 
strong enough to continue to work without profit, or 
carry stocks of goods indefinitely for the avoidance of the 
sacrifice of forced sales — in short, the very results which 
everybody must acknowledge are the special characteristics 
of the existing situation. And yet with such results so 
plain and palpable ''that he that runneth may read," we 
find the financiers and business men of the country every, 
where speculating and wondering what can be the cause of 
the bad times, and prophesying that next week or next 
month things will be better; when, if my diagnosis is cor- 
rect, they will not materially improve, but as Andrew Car- 
negie believes, will grow worse until, through wreck and 
disaster, the home domestic; manufacturing production is 
forced down into correspondence with or below the require- 
ments for domestic consumption — unless in the mean time, 
through a change in our national fiscal policy, other and 
larger markets and outlets for our present surplus product 
can be opened, or some special Providence — like famine or 
war in the Old "World — comes to temporarily help us out of 
our dilemma. 

OUTLOOK FOR LABOR AND WAGES. 

Such much, then, for the general business outlook. Let 
us next glance at the prospective situation for labor and 
wages. If the present curtailment or suspension of manu- 
facturing operations in this country is to continue, or even 
if there is to be merely a diminution in our past ratio of 
industrial growth and, development, and we are to con- 
tinue to have poured in upon us annually from half 
a million to six hundred thousand immigrants — mainly 
laborers in the prime of life: and an annual increase of 
our population from natural causes of about three per 
cent, per annum, it would seem also clear that there must 



406 REDUCTION OF TARIFF TAXATION. 

be extensive reductions in the wages of American laborers; 
for with two, tliree, or more sellers of labor for every one 
buyer, the buyer will fix the price; and the price which the 
buyer or American employer will strive to fix, and indeed 
the price which his necessities will compel him to fix, if he 
is going to extend his operations and avoid producing at a 
loss, will be such as will enable him to produce equally cheap 
with his foreign competitor. A continuation of the causes 
and policy which restricts our American manufacturers 
merely to the domestic market for the sale of his products, 
and debars him in a great degree from access to foreign 
markets, inevitably means, therefore, low wages, and the 
degradation and impoverishment of the masses, or ensures 
the very results which it is claimed a high tariff policy is 
certain to avert. 

WHY America's manufacturers cannot export their 

SURPLUS PRODUCTS. 

But how happens it, it may be here naturally asked, that 
American manufacturers are unable to dispose of their sur- 
plus products by the exportation and sale of the same in 
foreign markets. The answer is a simple one, and yet to 
very many of our people the problem involved seems very 
difficult of solution. The matter admits, however, of a 
ready comprehension, if one will only keep in view and re- 
flect upon the following circumstances: First, from eighty to 
ninety per cent, of all our manufactures exist because they 
must as a condition of our civilization, and because no for- 
eign products of like kinds can be imported. Any one may 
abundantly satisfy himself of this by analyzing the history 
or origin of the bulk of the commodities that pass him on 
the streets of any busy community, or are exposed for sale 
at the marts of trade. Let him, as a matter of test and 
curiosity, take a stand on any of the great thoroughfares of 
any of our large towns and cities, and see for himself how 



REDUCTION OF TARIFF TAXATION. 407 

few of the many articles which pass on the way to domestic 
consumers can by any possibility be directly benefited by a 
protective tariff. And first in the long procession will come 
our great agricultural staples, our corn and our wheat, our 
beef and our pork, our lard and our tallow, our butter and 
our cheese, our cotton and hay, and the typical American 
wools, our fresh and canned fruits and vegetables; for we 
export all these products, and anything which can be ex- 
ported- regularly, and sold in competition in foreign countries 
with similar foreign products, cannot be directly benefited 
by tariff legislation. And in the same category must be in- 
eluded an immense variety of the products of other indus- 
tries — our petroleum, turpentine, and resin; nearly all build- 
ing materials and constructions of wood, including vessels; 
our products of gold, silver, and copper; our stoves, tinware, 
shovels, axes, nearly all agricultural machines and imple- 
ments, and most articles of common hardware; cheap boots 
and shoes, and sole leather; coarse cotton fabrics, starch, 
refined sugar, distilled spirits and alcohol, most fermented 
liquors, wagons, carts, most carriages, harnesses, railroad cars, 
sewing machines, all ordinary confectionery, and the cheaper 
paper and paper hangings, photographs, picture frames, 
pianos, india rubber goods, toys, watches, guns, fixed ammu- 
nition, newspapers^ buttons, brooms, gas, clocks, and a great 
variety of other articles, not one of which, if the tariff was 
entirely abolished, would be imported to any considerable 
extent; and most of which, if the tariff was entirely abol- 
ished, would be manufactured and exported in vastly larger 
quantities than at present. Secondly, out of our entire man- 
ufactures, possibly twenty per cent., but probably not more 
than ten per cent., reckoning both numbers and quantities, 
are in a greater or less degree subject to foreign competition. 
And third, and finally, in the effort to protect this ten to 
twenty per cent., through the agency of taxation and restric- 
tions on exchanges, the cost of all the products of our entire 



408 REDUCTION OF TARIFF TAXATION. 

industry is enhanced to such an extent that exports only 
exist in cases where our natural advantages for production 
are so great as to overcome the increase of cost thus artifi- 
cially and unnaturally created. But doubtless I will be here 
met by Mr. Kelley, Warner Miller, and other advocates of 
high protection, with the remark that all this is mere assump- 
tion and one-sided assertion; well enough, so long as the 
free-traders are doing the talking ^ but which will not stand 
a minute after the other side has had their chance to rejoin 
and expose the sophistry. Let me, therefore, right here, ask 
your attention to a few facts in the way of evidence in sup- 
port of my position, which I think the more the high-tariff 
advocates chew upon, the harder they will find it to digest. 

I know of nothing which more conclusively proves the 
correctness of my proposition, that no community can exist 
without -supplying itself with its own manufactures in the 
largest measure, than the past and present industrial experi- 
ence of the Southern States. Slavery was fully consistent 
with the protective idea — in fact it was the logical outcome 
of protection. Capital protected labor wholly by owning the 
laborer, and did indirectly what the system of protection 
attempts to do directly — that is, it forced the growth of in- 
dustries in certain grooves. Under this system we had an 
' imperial section of land — endowed with the greatest abund- 
ance of varied resources and capable of sustaining home 
manufactures in endless variety — almost wholly devoted to 
agricultural pursuits, conducted by intelligent owners, yet 
tmder the necessity of the system by the rudest and most 
wasteful methods; or, as Henry A. Wise once summed it all 
up: *'The niggers skinned the land and the white men skin- 
ned the niggers." But now what do you see ? This same 
section is exposed to absolutely unrestrained competition of 
the long established industries of the North and West; and 
the South can erect no tariff defenses along its boundaries 
for protection; and according to our friends the protection- 



REDUCTION OF TARIFF TAXATION. 409 

ists, no profitable occupations could, under the circumstances, 
be open to its people but those pertaining to agriculture. 
But what are the facts ? While the South for the first time 
"breads herself," and exports grain, and has doubled her 
crop of cotton, Southern manufactures are being established 
everywhere. Cotton manufacture is more profitable at the 
South than in any other country in the world; and the num- 
ber of Southern spindles has increased sixty per cent, within 
the last three years. Iron is being produced under such 
conditions in Alabama, Tennessee, and V/est Virginia that 
foreign competition is impossible, and the furnaces of Penn- 
sylvania are being blown out and abandoned; while wood 
working in Kentucky, tanning in Tennessee, oil making in 
Mississippi, Arkansas, and Louisiana, and a thousand lesser 
Southern industries are in a state of intense activity and 
progression; and, as an accompaniment, villages are being 
established where before were only slave cabins, towns are 
growing where before were only villages, and great cities are 
amicably contending as to which is the most prosperous. 
Yet, if there was ever an instance of a people beginning to 
manufacture under the most discouraging and disheartening 
circumstances, I know not on what page of the world's ex- 
perience it is recorded. Eighteen years ago, the close of the 
war found them with their whole form of society dissolved ; 
their system of laws uprooted ; what they regarded as wealth 
swept away, their credit ruined, and every incipient attempt 
to manufacture exposed to the sharpest competition of a 
rich, strong, and skillful section, fully equipped with the best 
tools and machinery. But under the "healthy stimulus of 
prospective want," and in vindication of their right to be 
called Yankees, the Southern people manfully met the situa- 
tion and grappled with their problem. And to-day it is not 
they who have anything to fear from the competition of the 
manufacturing States of the East; but it is rather New 
England which has cause to tremble, lest being cut off by our 
18 



410 REDUCTION OF TARIFF TAXATION. 

vicious tariff from the commerce of the world, she would also 
lose her home market, and thus realize what England felt so 
sorely before Sir Robert Peel inaugurated the free trade 
movement, "when British protection, instead "of fostering 
home industries, had most effectually destroyed that trade by 
reducing the entire population to beggary, destitution, and 
want." And in further illustration of my premises, I hold 
in my hand for your inspection one of the most ingenious, 
artistic, and attractive calendars or almanacs for the new 
year. And where do you imagine it came from ? Not from 
your well established artists and printing works of New 
York, Boston, and Philadelphia; not from more distant 
London or Paris; but from Glen Allan in Virginia, if any- 
body knows where that is (for I do not); and the projectors 
and manufacturers of these cards were in Boston, New 
York, Philadelphia, and the cities of the West, seeking 
orders, and challenging competition, before the local dealers 
had got ready to contest their own local markets. 

. Walking down Broadway only a few days ago, I met a 
gentleman, whom I knew to be a large stockholder and 
director in one of our largest, oldest, and most successful 
establishments manufacturing a chemical product, which is 
in constant and most extensive use, not only in this, but in 
all other civilized countries. After exchanging salutations, 
and in response to the usual inquiry, as to what is the news? 
he told me that he had just come from a meeting of his 
board of directors, in which the question under discussion 
was, whether they had not better temporarily close up their 
works and stop manufacturing; for, he continued, we are 
certainly, through excessive competition and market supply, 
making no profit, and are probably incurring a loss on every 
day that we now keep in operation. But through great unwil- 
lingness to discharge their workingmen at the commencement 
of winter and allow their machinery to stand idle, it was 
resolved, after discussion, to defer a final decision until the 



REDUCTION OF TARIFF TAXATION. 411 

next monthly meeting, with, a hope that in the meantime 
something better would happen as respects the business out- 
look. Now I bring up this case, because it is a fair sample 
of what is occurring at this moment all over the country. 
There was no very marked falling off in the demand for the 
article produced. Civilization could not get on without it; 
and the sales even, aggregate thousands and hundreds of 
thousands of pounds daily. But more manufactories of it 
have come into existence in the United States than are 
necessary to supply any domestic demand for their product; 
and a tarifl' of sixty per cent, on the importation of the 
principal component raw material or constituent used in the 
manufacture, so enhances the price of this finished article, 
that not one ounce of it can be sold without loss in any 
foreign country. Hence our manufactories of this specialty 
are closing; our business is declining or unprofitable, and 
our ships are deprived of an important element of freight; 
while England, which imposes no tax, either on the raw or 
finished product, supplies the latter in enormous quantities 
to most other countries, and her ships distribute it. 

The next witness I will call will be Howard M. Newhall 
of Lynn, Massachusetts, whom the Boot and Shoe Reporter 
certifies to be one of the most enterprising and intelligent 
persons engaged in the shoe manufacture in this country, 
and thoroughly qualified to speak concerning it. This 
gentleman testified before a committee of the Legislature of 
Massachusetts in February last, in respect to the boot and 
shoe industry of the country, "that no other country knows 
how or could make shoes as fast and as cheap as the 
Yankees " — the manufacture being more typically Ameri- 
can than any other, and all the ingenious machinery which 
has revolutionized the lap -stone and the hammer out of exist- 
ence, having been of Yankee invention. Under such cir- 
cumstances domestic competition and the capacity of supply, 
he said, had so increased, that if all our existing factories 



412 REDUCTION OF TARIFF TAXATION. 

were to work full time for six months, their product would 
suffice to abundantly shoe every man, woman, and child in 
the country for a period of a full year. It is clear, there- 
fore, that to enable our shoe factories to run continuously 
and afford employment to their operatives all the year, we 
need some other than the domestic market for our shoe 
product. But this we cannot have under the existing tariff, 
which so enhances the cost of the materials which enter 
into the make-up of shoes that would sell most largely in 
foreign markets, that all the benefits resulting from ingenious 
machinery and skilled workmen are completely neutralized 
and swept away; and in illustration of this Mr. Newhall 
analyzed before the committee the components of a pair of 
shoes fitted to meet the requirements of a warm climate, 
and for which there is a large demand, and which demand 
Massachusetts would like to supply, and demonstrated that 
the cost of the material entering into them was enhanced by 
tariff taxes to the extent of sixty cents a pair before the 
work of manufacture even begins. And under such cir- 
cumstances there can be no export or foreign demand for 
American shoes, and the American shoemaker, no matter 
what may be the rate of his wages, has been so effectually 
protected that he cannot now be positively certain of con- 
tinuous employment in his avocation for more than a part 
of the year. And as a further contribution to this depart, 
ment of our tariff information, I would state that Ben 
Butler, who poses as the special friend of the American 
workingman, was instrumental more than any other person 
in imposing a duty on serges and lasting (which form a part 
of a large class of shoes), greater than is imposed on silks, 
wines, laces, and diamonds, and all because Ben Butler 
thought he saw an opportunity under such duties to make 
money by establishing a domestic manufacture of such 
materials. 

And now my next witness shall be Mr. "William Marshall, 



EEDUCTION OF TARIFF TAXATION. 413 

the president of the extensive and well-known cordage 
works of Brooklyn, who informs me that he exports cord- 
age of his manufacture to the Brazil and East Indies and 
sells it there for the equipment of foreign ships and other 
purposes, at a less price than the American ship owner and 
rigger can buy it within a mile of the factory where it is 
made. The explanation of this curious circumstance is that 
the cordage is manufactured of imported raw materials 
(which the country cannot produce), paying heavy duties — 
which duties less ten per cent, are remitted, when the cord- 
age is exported for foreign use; but are mercilessly exacted 
when the cordage is consumed at home. We thus discrimi- 
nate in respect to all these products and services in which 
cordage enters as a constituent or instrument in favor of 
foreigners, and to the detriment of our own people. 

Again, we formerly imported large quantities of gunny 
cloth from India to be used for the baling of our cotton. 
No one a few years ago would have ever dreamed that we 
could successfully make this cloth in competition with the 
natives of India, who work for the very lowest wages that 
are anywhere regularly paid for the services of human 
beings anywhere on the globe's surface. And yet, through 
our invention and use of machinery we have done it, and 
comparatively little of this cloth is now brought to this 
country; the Indian pauper being nowhere in competition 
with the American iron spindle and shuttle. But here, 
again, as in the boot and shoe industry, the facilities for 
production have caused this business to so far outgrow any 
requirements for home consumption, that the supply of 
bagging on hand during the present season has been re- 
ported as sufficient to bale a crop of cotton 2,000,000 bales 
larger than we have ever produced. And yet, such has 
been the general augmentation of the cost protection, that 
any relief from an exportation of this surplus has not been 
found practicable. 



414 REDUCTION OF TARIFF TAXATION. 

REMARKABLE INVESTIGATION OF MASSACHUSETTS INDUSTRIES. 

But the most conclusive and unanswerable demonstration 
of the disastrous and crippling influence of our present 
tariff policy on the labor and manufacturing interests of 
this country is to be found in the last report of the Massa- 
chusetts Bureau of Lahor Statistics ; which, although consti- 
tuting a contribution to economic science of surpassing 
interest, and of such a nature as ought to startle every fair- 
minded American citizen who has been educated to believe 
that our present high protective policy really works for the 
benefit of domestic labor and capital, has thus far, very 
curiously, almost escaped public attention. In this report a 
very careful analysis is made of the comparative condition 
of 2,240 manufacturing establishments in Massachusetts, 
representing twenty-one different industries and 207,798 
employees, for the years 1875 and 1880 respectively; the 
elements of the analysis being the census returns made to 
the Federal and State governments respecting capital, labor- 
ers, value of stock used and of product, cost of manage- 
ment, profits, etc., in the years specified, which are acknowl- 
edged to be as reliable as such returns possibly can be, and 
as probably superior to any similar statistics ever before 
collected. The 2,240 establishments also employed fifty- 
three per cent, of the invested capital, paid fifty -eight per 
cent, of wages, used fifty-seven per cent, of the stock, and 
produced fifty-seven per cent, of the entire manufactures of 
the State. 

Premising further that Massachusetts practically produces 
none of the stock or raw material which its manufactures 
use, but buys almost everything from beyond her borders, 
the investigation shows that the stock — metals, fibers, leather, 
coal, lumber, chemicals, and the like — used in manufactur- 
ing in that State in 1880,' cost 11.52 per cent, more than it 
did in 1875; -and that the manufacturers, as the report 
express it, '< counterbalance " the result by reducing the 



REDUCTION OF TARIFF TAXATION. 415 

wages of tlieir employees during the period involved to tlie 
extent, on an average, of 4.35 per cent., and by submitting 
to a reduction of their net profit of 7.19 per cent. Now 
when it is remembered that, the prices of manufacturers' 
raw materials have notably declined in all foreign competi- 
tive countries during the period covered by the Massachu- 
setts analysis; that the wages of foreign competitive labor 
during the same time have also very generally advanced; 
and that, apart from possible differences in the wages of 
labor, Massachusetts industries, in comparison with foreign 
industries, are not only not subjected to any special disabil- 
ities, but on the contrary enjoy many advantages — it seems 
clear that the extraordinary results under consideration can- 
not be referred to any other agency than that of our present 
national fiscal policy, which has pointed out, by excessive 
taxation and restriction of exchanges inevitably enhanced 
the cost of all manufactured commodities and their ele- 
ments. And in view of this Massachusetts experience, of 
how small importance is the question of the wages and liv- 
ing of the operatives in England, France, and Germany, in 
comparison with the understanding and the correcting of 
the influences which are slowly but surely reducing wages 
and profits in our home industries, restricting their area of 
development, and consequently the opportunities for the 
profitable employment of our rapidly increasing population. 
And as pertinent to this, I would' here state that I put the 
question to one of the most distinguished Germans who 
participated in the recent excursion over the Northern 
Pacific railroad, as to whether the recent adoption of the 
high protective policy m Germany had had the effect, as is 
claimed, of increasing the wages of the German people. 
His answer was, that in some departments of manufactur- 
ing industry the rates of wages had without doubt been 
materially advanced ; but, he continued, the cost of living — 
the price of food and of rents, have at the same time ad- 



416 EEDUCTION OF TARIFF TAXATION. 

vanced in a greater ratio; the hours of labor have been 
increased, the employers have become more exacting, there 
is less of liberty than at any time since 1849; and there 
never was a time, when the desire of the working classes to 
quit the fatherland was greater than at present; and in con- 
firmation of this last statement, a reference to the reports of 
the Treasury will show that the proportion of immigration 
into the United States is now and for the last few years has 
been very much greater than even from oppressed Ireland, 
or from any other country — for the year 1882, 250,000 out 
of a total of 788,000. 

INDUSTEIAL CONDITION OF FOEEIGN COUNTRIES. 

I am perfectly well aware that the complaint of overpro- 
duction, restricted markets and no profits in business, by 
reason of excessive competition, is at this time general in all 
commercial countries, and especially in Great Britain, where 
protection as an element of disturbance is wanting; and 
that, therefore, the reference I have here made of the exist- 
ing unsatisfactory state of affairs in the United States to 
our national fiscal policy may seem to not a few to be un- 
sound both in respect to facts and logic. That there have 
been great disturbances in the work of production and 
exchange of most countries in recent years, and taking the 
world throughout, most notably since 1873, and that these 
disturbances still continue, is not to be denied. But it is 
now very well recognized that the explanation of these 
phenomena is to be mainly found in the wonderful changes 
which, through invention and discovery, have recently taken 
place in the world's method of doing its work of production 
and distribution. And that these changes have been accom- 
panied with immense losses of capital and great disturbances 
of labor, in which the United States has participated and 
suffered in common with other countries. That their ulti- 
mate outcome, however, is to be good, cannot be doubted; 



REDUCTION OF TARIFF TAXATION. 417 

for, by an economic law whicli Mr. Atkinson of Boston, 
more than others, has recognized and formulated, all mate- 
rial progress is effected through the destruction of capital 
by invention and discovery, and that the rapidity of such 
destruction is the best indicator of the rapidity of progress. 
But in the readjustment by nations of their industries to 
the new circumstances, which is still going on and is yet 
very far from complete, the ''law of the survival of the 
fittest" is going to as fully assert itself, as it has been proved 
to do in the organic world; and in this struggle the United 
States, by reason of possessing, as no other nation does, the 
conditions for the cheapest production of the great staple 
commodities of the world's consumption, ought to prove 
itself the fittest, and dominate in ''manufactures" as it now 
dominates in respect to the production of cotton and food 
products. Why such a result has not yet been attained; 
why in the readjustment of industries to the new conditions, 
the United States suffers disproportionately, or even as 
much as her chief industrial competitor, Great Britain; and 
why under the present national fiscal policy, there is little 
chance for improvement — finds a sufficient explanation and 
answer in the results of the Massachusetts industrial investi- 
gation before referred to, even without taking into account 
a vast amount of other corresponding and confirmatory 
evidence. Great Britain moreover is not suffering industri- 
ally as is the United States. It is true that in many depart- 
ments of her industries there is a complaint that trade is 
extremely dull. But there is no such suspension of great 
departments of industry in Great Britain as in this country. 
Her export trade if dull, goes on uninterruptedly all the 
year. Her immense exportation of manufactured products 
. shows no diminution, but a continued increase. Her ships 
multiply upon the ocean. The condition of her operatives 
is steadily improving; and when the managers of the recent 
Industrial Exposition at Boston, just closed, made applica- 
18* 



418 EEDUCTION OF TARIFF TAXATION. 



tion to the great English machine works of Manchester to 
send samples of their machinery for exhibition, with a pros- 
pect of thereby increasing their orders, they obtained from 
all of them substantially this answer: that they had no 
unsold machinery to sell, and were too busy in supplying 
positive orders, to spend any time to prepare anything for 
exposition and prospective sales in the United States. 

NO MATEEIAL REDUCTIONS OF FEDERAL TAXATION YET 
EFFECTED. 

The most urgent necessity of the hour is, therefore, speedy 
large reduction of Federal taxation — or as my friend Mr. 
James S. Moore, the Parsee merchant, has happily expressed 
it, "no further maintenance of war-taxes in time of peace." 

And in making these reductions it seems but the dictates 
of common sense that those taxes should be first and specially 
selected for repeal which increase the cost of manufacturing 
production and of the Hving of the people, and not those 
which will cheapen the cost of whisky and tobacco — two 
articles which in respect to living are regarded as luxuries, 
if not harmful, and only one of which enters to any extent as 
an element in other forms of production. Thus far, although 
pretense is made to the contrary, there has been really no 
great or reasonable abatement in the burdens of national 
taxation, especially under the tariff. It was claimed by Mr. 
Morrill and other prominent protectionists that the effect of 
the new tari:ff schedules would reduce the revenues from 
customs by about $35,000,000, and the average rates of duty 
fifteen or a greater percentage. Four months of the present 
fiscal year have now elapsed, and the results show that the 
reductions of the revenues from the customs will not be in 
excess of fifteen millions, and that the average rates actually 
assessed and collected on dutiable imports during this period 
have been 41.95 per cent., or only one and a half per centum 
less than prevailed in 1882, or before the pretended tariff 



tlEDUCTION OF TARIFF TAXATION. 419 

reductions of March last were placed upon the statute book. 
So that the country still enjoys the blessings of a forty per 
cent, tariff on all dutiable imports, and the surplus revenue 
of the Treasury for the present fiscal year will probably be 
not less than a hundred million of dollars, and may consid- 
erably exceed this figure. 

THE TWO POLICIES IN EESPECT TO THE REDUCTION OF FEDERAL 
TAXATION AND THEIR PROSPECTIVE RESULTS. 

That public sympathy is all but unanimously in favor of 
further large and speedy reductions of federal taxes cannot 
be doubted. But at the same time there are serious differ- 
ences of opinion as to the departments of the revenue in 
which the taxes should be abated. The representatives of 
the high protective policy are earnest in their protests against 
any further abatements of the tariff, and are certain that 
further reduction of duties would not result in great reduc- 
tions of wages and the destruction of American industries; 
and, in order to prevent such legislation, are willing to 
exempt rum and tobacco from all taxation, to vote for new 
and largely increased governmental expenditures, and to 
even keep up high taxes for the purpose of distributing a 
large annual resultant revenue back again to the people. 
The question at issue is, however, an eminently practical one ; 
which ought to be discussed and decided from the standpoint 
of the nation's necessities and experiences, and without any 
reference to the theories of either protection or free trade. 
If the decision is in favor of allowing the tariff to remain 
unchanged, then abundant experience teaches that the nation 
will have substantially no market for its manufactured 
product except a home market; that the growth" of our 
industries will be restricted and limited, and that there will 
be a reduction in the wages of its labor, and no accompany- 
ing reduction in the cost of its living. On the other hand, 
a reduction of the tariff means the inauguration of a new 



420 EEDUCTION OF TARIFF TAXATION. 

and grand commercial policy worthy of our industrial 
strength and resources as a nation. It means free access to 
a thousand milhons of people as our customers, in place of 
our home population of 56,000,000 — which latter number, 
large as it is absolutely, is altogether too small and insignifi- 
cant for our present and prospective capacity of supply. 

THE PRESENT MOST INJURIOUS EFFECT OF THE HIGH TARIFF. 

In discussing the tariff heretofore the ojJponents of pro- 
tection have been accustomed to consider the enhancement 
of prices to the consumers as the greatest evil which this 
policy entails; and are able to now, more than ever, substan- 
tiate their position by pointing on the one hand to the 
enormous maintenance in prices which followed imposition 
of a 100 per cent, tariff on the importation of Bessemer steel 
rails; and the reduction in the price of matches and quinine, 
which followed the removal of taxes and duties from these 
articles — from two dollars to seventy-five cents a gross in the 
one case, and to the extent of about three-eighths in the other; 
to which might further be added in the way of illustration that 
while, with a continuance of the protection and taxes in the 
Bessemer steel rail case, the mills are stopping, and the pro- 
duction has become unprofitable through over-supply and 
excessive competition, the reduction of taxes and prices in 
the case of matches and quinine, has been followed by a 
larger consumption and a more active manufacture than 
ever. But great and injurious as is this burden of the 
present high tariff, and I would not underrate it, the tariff 
works at present a far greater injury in restricting our 
industrial growth and preventing us from obtaining a 
market for our surplus production. We are rich, and, as 
experience has abundantly taught us, can stand a heavy 
imposition of taxes. But we cannot stand a stagnation and 
curtailment of business. To understand this proposition 
more clearly, let us reason about it a little. 



REDUCTION OF TARIFF TAXATION. 421 

The burden or injurious effect of a tax is not to be meas- 
ured by tlie ratio whicli the tax may bear to the gross value 
of the thing taxed, but by the proportion which the tax 
bears to the profit which might be made by undertaking a 
certain production. To practically illustrate this, let us take 
an example; let us suppose two men, A and B, to start 
machine shops, each with a capital of $20,000; and that 
each in his operations expends $20,000 for coal and iron, 
$40,000 in wages, and $2,000 per annum for transportation 
to the shops of the raw material. The total costs of the 
annual product of each shop will be $64,000, and a sale of 
the product at the net price of $66,000 will yield the owner 
$2,000, or ten per cent, on his capital, and all will be pros- 
perous. Now, suppose further, that under such conditions 
A has a tax imposed upon him of three and one-third per 
cent, on his product — it may be a custom or an internal rev- 
enue tax, or an increased rate of railroad freight. This 
amounts to $2,000 on $64,000 of product; no great burden, 
you will say: and only requires him to sell his $66,000 for 
$2,000 additional. But suppose he cannot get this $2,000 
additional, and he certainly cannot if the other man, B, is 
exempt from this three and one-third per cent, tax, and com- 
petes with A in the open market. Then this three and one- 
third per cent, upon product becomes ten per cent, upon the 
investment, and entirely absorbs all profit, so that the busi- 
ness of A first drags, then stagnates, and is finally abandoned; 
while his workmen are discharged, the village where his 
shop may be situated runs down, and railroads, artisans, 
shop-keepers, and professional men complain of hard times, 
and in turn decrease their expenditures. B, on the other 
hand, exempt from the tax, keeps on working, and when 
hard times come continues his sales and occupation to his 
workmen by taking five per cent, profit in place of ten, and 
selling his goods, as he can afford to, at a reduced price. 
Now one result of the new inventions for annihilating time 



422 REDUCTION OF TARIFF TAXATION. 

and space is^ that for purposes of trade and commerce the 
world has become practically one, and profits at wholesale 
are limited, and trade turns upon the smallest percentages — 
a quarter of a cent a yard, a cent a bushel, and a mill a 
pound — and if a duty is imposed upon any article of foreign 
product which enters into the processes of domestic industry, 
and directly or indirectly increases the cost thereof by the 
measure of these small percentages (and under the tariff we 
talk of twenty, forty, and even 100 per cent, taxes), then all 
foreign sales of the products of such industries will be simply 
impossible. This explanation also explains why the first 
tentative measures of tariff reform, instituted by Sir Eobert 
Peel in 1842 and 1845, which consisted mainly in the 
removal of numerous small but obstructive tariff duties, set 
British manufactures and industries forward by leaps and 
bounds, even before the greater burden of the corn laws was 
removed in 1845. And so undeniable and apparent were 
the benefits flowing from these originally comparatively 
small measures of British tariff reform that those who in the 
outset gave an unwilling support to Sir Kobert Peel, or 
openly opposed him, in a few short years became his most 
earnest supporters, and urgently demanded more. And so, 
I am convinced, will be the experience of this country, if it 
now cautiously, tentatively, and intelligently moves on in the 
work of tariff reductions -and reform. For on its face what 
can be more preposterous and absurd than the assertion that 
a people can be made prosperous by taxation — that is, by 
arbitrarily taking something away from them. 

As further illustrating the probable beneficial effects of a 
reduction of the tariff, I cannot forbear giving the personal 
testimony of two gentlemen who certainly, up to this time, 
have been regarded as worthy of all credence by the advo- 
cates of the policy of high duties. 



REDUCTION OF TARIFF TAXATION. 423 

EFFECT OF THE KEDUCTION OF THE TAKIFF ON SHIP BUILDING 
JOHN EOACH's OPINION. 

It was my pleasant fortune to have a lengthy interview 
last spring with John Roach — a man for whose enterprise 
and skill in his profession I entertain the greatest respect. 
As was to be expected, the tariff in relation to ship building 
came up for discussion; and John, as usual, dwelt long and 
earnestly upon the enormous differences in the wages paid 
in his ship-yards and upon the Clyde — and, as near as T can 
remember, he figured out his nominal disadvantage in this 
respect to be about seventy per cent. ''But," he continued, 
'' my men work mainly by the piece, and have such an oppor- 
tunity and incentive in so doing to augment their wages, 
that they have invented and practice all manner of devices 
for economizing and perfecting their labor; so much so, that 
foreign ship builders who visit my yards are astonished at 
the amount and excellence of the work we are able to turn 
out in a given time; and we have thus been enabled to so far 
overcome the difference in wages that I really do not believe 
the Englishmen have at present more than thirty per cent, the 
advantage over us in the cost of their labor." '' Well, it seems 
tome, Mr. Roach," I replied, "that in making this admis- 
sion, you give up your whole case as a protectionist; for the 
materials which you employ in constructing your own ^«essels 
are augmented in price to a greater extent than thirty per 
cent, by reason of the tariff; and if through a remission of 
duties you could buy these materials as cheap in Delaware 
as upon the Clyde, you could still afford to pay your work- 
men the same wages and bid defiance to all foreign competi- 
tion." "I really believe we could; I really believe we 
could," was the instant rejoinder; ''for, what these protec- 
tionists " — prefacing the word protectionists with an exple- 
tive more forcible than polite — " give me with one hand, 
they more than take away with the other." Whether John 
Roach would now think it politic to remember this conversa- 



424 , EEDUCTION OF TARIFF TAXATION. 

tion I do not know; but nevertheless I feel confident that it 
represents his real sentiments. 

THE EFFECT OF THIS REPEAL OF THE DUTIES ON WOOL. 

Again, the wool growers of Ohio and some other parts of 
the country are much disgruntled at the trifling reduction 
made last winter in the duties on wool, which, by the way, 
fell mainly on carpet wools, which we never have grown and 
could not be induced to grow in this country — and a motion 
will undoubtedly be made early in the coming session to put 
back this wool tariff to its old figures. Meeting a few days 
since George William Bond of Boston, the highest authority 
on wool in this country, the expert relied upon by the Treasury 
to fix the grades and the prices of wool for the custom's 
service, and a gentleman who has always had the confidence 
of the protectionists, I put to him the question, as to what 
effect a complete abolition of the duties on wool would have 
on the interests of the American wool growers and woolen 
manufacturers. He replied that he had recently given to 
Mr. A. M. Garland of Ohio, late president of the American 

Wool Growers' Association and a member of the late tariff 

\ 

commission, an answer in writing to substantially the same 
question; at the same time offering me a copy of the latter, 
with permission to make such use of it as 1 might deem ex- 
pedient. And as Mr. Garland, for obvious reasons, does not 
seem to have given the public a chance to see this important 
letter, I do not think I can do better than to here make 
known the most essential portions of it. 

Mr. Bond begins his letter by saying '' that high duties on 
wool are now maintained as a bounty to States which raise 
comparatively a small part of the clip, for the rest do not re- 
quire it. The oft-repeated claim that the United States 
should raise all the wool she consumes is folly. You ask, at 
what point does any tariff on wool begin to affect the price 
of the domestic clip ? " I should say at that point which 



REDUCTION OF TARIFF TAXATION. 425 

shuts us out from the competition of the world, so that we 
are restricted in the range of our manufactures. Our fine 
wools have always been higher, other things being equal, 
when we were able freely to import the wools of other coun, 
tries at a low duty, or at no duty at all. When the tariff of 
1857 was passed, fine wools became virtually free, so that 
we went into full, or nearly full, competition with Europe. 
What was the effect ? Wools advanced immediately m the 
markets of production abroad twenty-five to thirty -three and 
one-third per cent., so that we got them no cheaper than be- 
fore, and the prices of domestic wools advanced. Now, this 
was an advantage to our manufacturers, as it enhanced the 
cost to the foreign manufacturers, so that ours could well 
afford to pay the advanced prices. Reduced to gold, the 
average prices of wool have been lower under the tariff of 
1867 than they were under that of 1857, and I believe that, 
if wools were to be made free to-day, there would be no 
material decline in the value of our fine American wools. 
Thus we see that, by exacting a duty which shuts us out 
from competition in the world's markets, we give our compet- 
itors the raw material enough lower to materially lessen the 
protection afforded. by the duty on the manufactured article." 

Fickle fashion is so changeable that protection cannot 
always protect our fine wools: 

'^ The present indications are that goods with finished face 
will soon again be in fashion. As yet, we have found almost 
no wools in this country adapted to this manufacture. We 
shall again be obliged to import, and if the tariff should be 
too high to allow of that, many of our mills must be closed, 
for the people will follow the fashion. Should this come, 
you may look again for a decline in the bulk of the wools of 
this country. Looking to the general interests of wool grow- 
ing in this country, I believe — and this from a careful study 
of the wool manufacture, its successes, its failures, and vicis- 
situdes — that the lower the duties are upon wool, and the 



426 REDUCTION OF TARIFF TAXATION. 

closer to the absolute requirements under the greatest appli- 
cation of skill and energy, is the protective duty upon the 
manufactures, the greater will be the success of these two 
great interests. 

*' You and your friends will not probably agree with me in 
these views, but they are the results of fifty years' study and 
experience. Yours very truly, 

''Geo. Wm. Bond." 

the necessity of the houk. 

The pressing necessity of the hour, therefore, with us, as 
I again repeat, is a reduction of tariff taxes, with a view and 
certainty of obtaining thereby an extension of markets for 
our products, and m default thereof we are certain to be 
smothered in our own grease. But how shall we secure the 
extension of markets and thereby continued national develop- 
ment and prosperity ? Certainly it will not be through fur- 
ther bounties, subsidies, restrictions, fine-spun legislative 
contrivances, or appeals to patriotism and the talk of the 
fathers. All this is only more hair of the same dog that has 
heretofore afflicted us. Neither do we need more brains — 
Congress excepted — or courage, or capital, or intelligent 
laborers, for none of these have ever been lacking in Amer- 
ica, when a fair chance offered for their employment. But 
what we do want is more liberty — liberty for labor and cap- 
ital alike to buy where and what they want, and sell where 
and when they please, without the interference of the legis- 
lature, or of any interested capitalists who may try to influ- 
ence legislation; and unless the country can have such a de- 
gree of freedom, all other remedies will be useless. But, 
on the other hand, with production and exchange freed from 
all artifij3ial burdens and restrictions, save such as an econo- 
mical administration of the State may find necessary to im- 
pose for the sake of revenue ; this nation will, I feel assured, 
speedily attain to such a supremacy in the world's commerce, 



REDUCTION OF TARIFF TAXATION. 427 

and to such a degree of domestic prosperity and abundance 
as has hardly yet been dreamed of by the most sanguine of 
our countrymen. 

And as showing that intelligent and far-seeing Enghsh- 
men foresee that such may be the result if we once fairly 
abandon our narrow, illiberal, worse than old Chinese policy, 
and dread our competition in the world's market under such 
circumstances, I will read to you an extract from a letter 
addressed to me under date of August last, from one of the 
leading railroad authorities in Great Britain — the projector, 
in fact, of the proposed tunnel under the Straits of Dover — 
to whom I sent some free-trade publications. ''I have read," 
he says, "your two brochures with pleasure. But as an 
Islander, I have never been an enthusiastic well-wisher for 
free-trade in the United States. For when you throw over- 
board, the burden of monopoly and walk straight out into 
the free world of industry unweighted, then 'Bull' must 
look out. It vnll be a grand day for you; but after five 
years, a sad day for ' Bull.' So keep up restrictions as long 
as you like, say I. Save that one would like — as an old 
pioneer for commercial freedom in 1833 — to see English- 
speaking people all over the world with one free-trade tariff, 
if only to show to aU nations that all sorts of freedom spoke 
from that tongue of their forefathers." 



CHAPTER XXIV. 

VIEWS OF PRESIDENT LINCOLN * 



Clinton, October 11, 1859. 

DR. EDWARD WALLACE :—My Dear Sir :—l am 
here just now, attending court. Yesterday, before 
I left Springfield, your brother [Dr. Wm. S. Wallace] showed 
me a letter of yours, in which you kindly mention my 
name, inquire my tariff views, and suggest the propriety 
of my writing a letter upon the subject. I was an" old 
Henry-CIay-Tariff Whig. In old times I made more 
speeches on that subject than on any other. I have not 
since changed my views. I believe yet if we could have 
a moderate, carefully-adjusted, protective tariff, so far 
acquiesced in as not to be a perpetual subject of political 
strife, squabbles, changes, and uncertainties, it would be 
better for us. Still, it is my opinion, that just now the 
revival of that question will not advance the cause itself, 
or the man who revives it. 

I have not thought much on the subject recently; but my 
general impression is that the necessity of a protective tariff 
will ere long force its old opponents to take it up; and then 
its old friends can join in and establish it on a more firm and 
durable basis. We, the old Whigs, have been entirely 
beaten out on the tariff question; and w^e shall not be able 
to re-establish the policy until the absence of it shall have 
demonstrated the necessity for it in the minds of men here- 
tof ore opposed to it. With this view I should prefer to not 
now write a public letter upon the subject. 1 therefore wish 
this to be considered confidential. 

I shall be very glad to receive a letter from you. 

Yours truly, A. LINCOLN. 

*Lawson"s Life of Lincoln. 

(428) 



CHAPTER XXV. 



THE TARIFF. 



By Hon. John Randolph Tucker, 
Of Virginia, in the House of Representatives, Friday, May 5, 1883. 



MR. CHAIRMAN : The subject involved in the discus- 
sion upon this bill is of all others now challenging 
public attention the most important, and one of the most 
difficult of practical solution. The fiscal action of this Gov- 
ernment and of all governments — ^by wbich 1 mean the 
raising of revenue and its appropriation for the expenses of 
government — is necessarily unequal in its operation and 
effects. There is a large class of people who pay more into 
the Treasury than they ever get back from it; and there is 
a large class who get more out of the Treasury than they 
ever put into it. 

The effect of this exaction and appropriation is, that there 
is in every country a tax-consuming class and a tax-paying 
class. Therefore, it should be the policy of all good gov- 
ernments to confine within the narrowest bounds consistently 
with the needs of the public service this fiscal action of the 
Government, because it must necessarily operate unequally 
in the distribution of benefits and burdens. 

But in the character of our own revenue system there is 
a most unpleasant tendency to irresponsibility for expendi- 
ture as well as for taxation. Our whole system of taxation 
by the Federal Government is indirect in its character; and 
therefore taxation and expenditures are felt very little by 

(429) 



430 THE TARIFF — TUCKER. . 

the people, tTie consequence of whicli is that the Government 
may lavish enormous revenues upon its favorite projects, 
and the people be all unconscious that they are paying any 
taxes to meet these expenditures. 

Now, how we are to apportion the $300,000,000 of revenue 
needed for the Government among 50,000,000 of people, 
making on the average six dollars per capita or thirty dollars 
to the family of five persons; how we are to adjust this 
burden upon the people for the necessities of the Govern- 
ment; how to lay our taxes with justice and with the least 
oppression, so as to bear in due proportion to the ability of 
each citizen, rich or poor, to pay, is one of the most impor- 
tant and difiScult problems of government. 

Taxation is a branch of what the law writers call " eminent 
domain " ; that is, the supreme domain which government 
has over the property of the citizen or over his person, when 
either is needed for a "public use." Man and his property 
may be commanded by government for a "public use"; 
that is, for a purpose which concerns all as members of 
society, and gives benefit to the party subjected to this 
power, in common with all others. It must be a public use, 
as distinguished from a private benefit. 

But government cannot take private property, even for 
a public use, without just compensation. This principle, 
canonized in Magna Charta six centuries ago, is a part of 
the fifth amendment of the Constitution of the United States. 

Taxation exacts the property of the citizen for public use. 
It does not, it cannot, give him compensation for this, for 
that would be to give him back what it had just exacted, 
which would make nugatory the power of taxation. The 
just compensation which each citizen thus contributing of 
his means to the support of government receives is in the 
equal benefits which he derives in common with all others 
from the beneficent action of tlie government for the safety 
and well being of the whole people. 



THE TARIFF TUCKER. 431 

Now, to take property for public use without just com- 
pensation is clearly unconstitutional. To take it for private 
use, even on just compensation, is as clearly unconstitutional. 
It assails the manhood of the citizen to take what he has 
earned for the private use of another. This is tribute 
exacted for the support of privilege. Take it for a public 
use, on just compensation, and it is right. But to take it 
for public use without compensation, or for private use, even 
on just compensation, is to violate the liberty of the man in 
his self -use, and his right to hold aM he earns against men 
and government, except for the common benefit of society. 

Taxation exacts property for public use without any com- 
pensation but the common benefit. Bearing a common 
burden, the citizen must derive a common benefit. When 
revenue is needed, it is his contribution to the common fund 
for a common benefit, but when taxation is laid, except for 
the revenue needed by the Government, when it takes the 
property of A to give it to B , when it exacts a tribute from 
one to bestow a bounty on another, this violates right and 
justice, this lays burdens on one to create a privilege for 
another, this is despotism and tyranny; for if when com- 
pensation be given it is unconstitutional to take A's property 
for private purposes, a fortiori it is unconstitutional to tax 
A for B's benefit without compensation. When, therefore, 
the tax power is exerted to raise revenue for the Govern- 
ment it IS just and legitimate , but when it is perverted from 
the purpose of revenue to the grant of a bounty or special 
privilege to a man or a class, if done directly it is a robbery; 
if indirectly, it is a fraud, under forms of law. It is no 
longer for the use of Government, but a bounty exacted 
from the citizen to maintain a privileged class. This is 
despotism and tyranny. 

Taxation for revenue only is therefore a fundamental 
maxim of all true liberty! Taxation perverted from this 
purpose to the object of so-called protection to any class, 



432 THE TARIFF — TUCKER. 

directly or indirectly, is not only illegitimate but a violation 
of right and justice, and, in my judgment, contrary to the 
spirit of the Constitution. 

Now, I advance another step and affirm that all taxation 
should be equal. I do not mean that each man should pay 
the same amount of tax; but it should be equal m this: it 
should be proportioned to the ability of each citizen to con- 
tribute to the common revenue, and by being thus propor- 
tioned it will meet that othe» view which, has been taken of 
taxation by some writers, it will be in proportion to the 
means of each man, which are protected by the Government. 

With a view to considerations which will be presented 
later in this discussion, I propose now to take a summary 
notice of the various modes of taxation which might be 
adopted by this Government. 

The first form is direct taxation, which is a tax on the 
corpus of property, or on the income of property, or a 
tax on the head — a capitation tax,- and secondly, indirect 
taxation. 

The indirect tax is a tax on consumption; because, as will 
be shown hereafter, customs duties, license taxes, and the 
excise tax, at last fall on the consumer, and therefore these 
indirect forms of taxation are really taxes on consumption. 

Let us look at them for a moment. Suppose we should 
raise (as the gentleman from Rhode Island has suggested) 
the $300,000,000 of revenue we need by a capitation tax on 
50,000,000 of people; that would be six dollars per head, 
or thirty dollars for the family of five persons. Now, this 
tax would be very unequal and unjust, and specially onerous 
on the poor, but I will show you presently, Mr. Chairman, 
that there is not a poor laboring man in the country who 
would not make money by paying such a capitation tax 
instead of the taxes he pays under this tariff. Thirty dollars 
per family raised by a capitation tax would be very unequal, 
because Vanderbilt and (jould would pay no more tax than 



THE TARIFF — TUCKER. 433 

the pauper in the street. They would pay by the head and 
not according to ability. 

Now take a tax on the corpus of property. That ought to 
be ad valorem; because, if specific then the same tax would 
be laid on an acre of mountain land as upon an acre in the 
city of New York. Therefore, it must be ad valorem in 
order to approach equality. 

But if ad valorem, it would be an unequal tax, because it 
would tax the scanty furniture of the wretched room of the 
_X)or seamstress in the same ratio that you tax the owner of 
a palace filled with luxuries and plenty. 

And besides you would tax the widow with her two 
mites, which she needs for her living, in the same ratio 
that you tax the property of the millionaire, which is far in 
excess of his needs. Besides, you would make the non- 
income-bearing property pay equally with that which breeds 
ample income, and, furthermore, you would relieve the 
ample income of the professional man and others of all tax 
because they have no tangible property you could reach. 

What then ? It is best and fairest to lay the tax accord- 
ing to the ability of the tax-payers to pay, because all taxes, 
you perceive, are at last paid out of the man's income. The 
fairest tax of all the various forms of taxation, in my judg- 
ment, that can be laid on the citizen would be a tax pro- 
portioned to incomes, with an exemption of a part to cover 
the needs of life; because thus you would make the man 
pay, in proportion to his ability, to meet the exigencies of 
the Government. And while thus you would not burden 
non -income bearing property, you would make those con- 
tribute to the public Treasury who get an income, although 
they have no ostensible property. Their income measures 
abihty to pay — and also the benefit which the Government 
affords to him who earns the income under its protecting 
care. 

I come now to indirect taxation. It is an ingenious device 
19 



434 THE TARIFF TUCKER. 



of government by which the citizen is chloroformed into 
unconsciousness of the source and cause of the felt burden 
which he bears. I will venture to say there is hardly one 
man in ten in the secluded parts of this country who 
realizes the fact that he pays in some States as much as 
fourfold more of tax to this Government than he does to 
the government of the State under which he lives; and 
therefore it is that there is a temptation — and I beg to call 
gentlemen's attention to it — on the part of the people to 
see power go out of the hands of the States into the hands 
of this Government, because power which requires an appro- 
priation of money is felt by the people of the country less 
consciously when it is expended by this Government than 
when it is expended by the State government. 

And, in my judgment, one of the most centralizing tend- 
encies of our federative system results from this fact: that 
the power of this Government is made effective through 
indirect taxation of which the citizen is unconscious, while 
the power of the State is exercised by means of direct taxa- 
tion; and the people, so unconscious of the one and so sen- 
sitively conscious of the other, are reluctant for the exercise 
of power by the States which will require the taxation they 
see and feel, and more willingly concede that power to the 
General Government because it is to be exercised through 
indirect taxation which they do not see and feel. 

But the payer of the duty, of the license tax and of the 
excise knows that he pays no tax which he will not recover 
back from the consumer; and the consumer forgets or fails 
to remember that he is repaying the tax or duty already paid 
to the Government by these middlemen, the amount of which 
tax or duty is included and concealed in the price of the 
article which he buys. These are, therefore, taxes on con- 
sumption, and were originally invented to drug the people 
into unconsciousness and thus make the Government irre- 
sponsible for taxation and for expenditure. It thus stimu- 



THE TARIFF — TUCKER. 435 

lates extravagance and perpetuates liea\^ taxation; for, from 
the effect such taxes have on the business, industries, and 
trade of the country, taxation becomes permanent, for fear 
a change may disturb these sensitive interests; and this gen- 
eration is to-day paying taxes to which it never gave its 
consent through its representatives, but which was entailed 
upon it by a generation now dead and gone. 



CHAPTER XXVI. 

FREE TRADE * 
By Hon. John G. Caelisle. 



MR. PRESIDENT, and Gentlemen of the Club: I 
would be cold indeed if I were not profoundly 
grateful for this very friendly reception. It is so much 
more than I expected or had any right to expect, that I feel 
myself wholly unable to express ray appreciation of it. I 
am obliged to you also for the opportunity to say a few 
words in response to the toast which is announced. Al- 
though, of course, it will be impossible under the circum- 
stances to do justice to the subject, and perhaps I shall not 
confine myself very closely to it. Certainly I shall not 
attempt to do more than call your attention to one or two 
of the most conspicuous advantages conferred upon the 
American people by the Union established in 1789. 

THE FORMATION OF THE UNION. 

The formation of that Union, peaceable and voluntary, 
under a Constitution which made such radical changes in 
the relations previously existing between the several States 
themselves and between them and the General Government, 
was undoubtedly one of the greatest political achievements 
of modern times. It is difficult to say which is the more 
entitled to our admiration, the statesmanship of the men 



The banquet of the Free Trade Club in New York, March 15. 1884. 

(436) 



FREE TRADE — CARLISLE. 437 

who framed the Constitution, or the patriotism and intelli- 
gence of the people of the several States who ratified it and 
made it for themselves and posterity the supreme law of 
the land. It is, 1 think, safe to assert that in no other part 
of the world could such a fundamental change have been 
so peaceably made at that time, and perhaps it is equally 
safe to say that it could not have been made here twenty or 
thirty years later. Why and how this Union was formed 
are historical questions which it would be superfluous and, 
in fact, impossible to discuss upon this occasion. What 
benefits, what advantages it has yielded or conferred upon 
us, how its bonds shall be strengthened and the prosperity 
of all its parts increased and perpetuated, are questions 
which challenge our attention constantly. 



The old confederation possessed no means of sustaining 
itself. In fact, it was but a skeleton of a government. It 
had no power to impose taxes or to regulate commerce or 
to administer justice. It had but one of the essential de- 
partments of a real government — the Legislature — and 
even that was defective and almost impotent. Each State 
had the right to lay imposts and duties subject only to the 
condition that they should not interfere with treaties en- 
tered into by the United States, in Congress assembled, 
with foreign kings, princes, or States. There was no limit- 
ation whatever upon the power of any State to impose 
duties upon the products of any other American State 
brought within its limits for sale or consumption. For 
the purpose of raising a revenue or for the purpose of 
encouraging its own domestic manufactures the State of 
New York had full power to impose any rate of duty it 
might see fit to establish upon the prodiicts of New Jer- 
sey, and the State of New Jersey possessed the same power 
in respect to the products of New York. If the doctrine 



4B8 FREE TRADE — CARLISLE. 

of protection is what its friends claim, if its application to 
infant industries in new States enables them to overcome 
natural disadvantages and to secure a higher degree of pros- 
perity than would otherwise be attainable, it must be ad- 
mitted that the arrangement existing under the confed- 
eration was a wise one and ought never to have been 
disturbed. 

THE "fathers" were FREE TRADERS. 

But, gentlemen, the framers of the Constitution, the men 
who founded this federal Union, did not think so. They 
believed that free trade — absolute free trade between the 
03veral States was imperatively demanded by the interests 
of the people. And accordingly they adopted this provis- 
ion as a part of the Constitution without a single dissenting 
vote: 

" No State shall, without the consent of Congress, lay any 
imposts or duties upon imports or exports except what may 
be absolutely necessary for executing its inspection laws, and 
,the net proceeds of all duties or imposts levied by any State 
on imports or exports shall be for the use of the Treasury of 
the United States; and' all such laws shall be subject to the 
revision and control of Congress." 

It is true that Mr. George Clymer of Pennsylvania, said 
in the Convention while this subject was under consideration 
that "if the States have such different interests that they 
cannot be left to regulate their own affairs without encoun- 
tering the interest of other States, it is proof that they are 
not fit to compose one nation." But he stood substantially 
alone in his opposition to this provision, and when the vote 
was taken not a single State was recorded against it. 

CONSTITUTIONAL ORIGIN OF FREE TRADE. 

Thus free trade was established by the Constitution, not 
only between the States then existing, but between all the 
States that might thereafter exist as members of the fade* 



FREE TRADE CARLISLE. 439 

ral Union — and I ventin-e to believe, my friends, tiiat 
the most ardent advocate of the protective system will" 
admit that the wonderful growth and prosperity of this 
country are attributable to this provision more largely 
than to any other one thing. "With free commercial in- 
tercourse between the States our own internal commerce 
has steadily and rapidly grown until it amounts to thousands 
of millions of dollars; more than one hundred and twenty 
thousand miles of railroad have been constructed, over which 
almost innumerable trains are constantly passing, carrying 
manufactured and other articles of commerce from State to 
State, while our great waterways are crowded with steamers 
and barges and other craft laden with the products of every 
part of the Union. The markets of New York are free as 
the markets of Philadelphia to the iron and steel and coal of 
Pennsylvania; as free as the markets of Savannah or Mobile 
or Charleston for the cotton and the fruits of the South. 

THE EIVAL POLICIES ILLUSTEATED. 

"What a different picture this country presents from what 
it would have presented if the policy of restriction and pro- 
tection had prevailed among the States as it has prevailed 
for so many years between the United States and foreign 
nations. Under the liberal policy established by the 
Constitution our means of internal communication and 
transportation have increased and are still increasing, while 
under the restrictive and obstructive policy of Congress our 
merchant marine, once the source of pride and profit, has 
almost disappeared from the seas, and unless something can 
be done to arrest its further decline it will disappear entirely. 
Free commercial intercourse between the States has increased 
trade, promoted the development of our resources, fostered 
agriculture and manufactures, and added untold milhons to 
the wealth of the people; while the protective system main- 
tained by Congressional legislation has, to a large extent at 



440 FREE TRADE — CARLISLE. 

least, shut us out from fhe markets of tlie outside world, 
limited production substantially to the demands of home 
consumption, and in many cases actually arrested the devel- 
opment of great industrial interests. Under this system, 
when any highly protected manufacturing industry has 
reached a stage of development which enables it to supply 
the home demand its growth must virtually cease because its 
products can have access to no other market. 

ABUSE OF THE POWER OF TAXATION. 

The Constitution not only prohibited the States from laying 
imposts or duties upon imports or exports, but it expressly 
delegated to Congress the power to lay and collect taxes, 
duties, imports, and excises to pay its debts and provide for 
the common defense and general welfare. This is simply 
the power to raise revenue for public purposes. It is wholly 
separate and distinct from the power to regulate commerce 
between the United States and foreign nations and among 
the several States and with the various Indian tribes, which is 
conferred by another clause of the Constitution. The two 
powers were delegated for entirely different purposes; and 
it is a monstrous abuse of the power of taxation to use it, 
not for the purpose of raising revenue, but for the purpose 
of regulating or prohibiting commerce. It is, if possible, a 
still greater abuse of that power to employ it for private in- 
stead of public purposes. 

MR. Carlisle's precise attitude. 

Let no one, I pray you, misunderstand me upon this point. 
The experience of mankind has shown that it is almost, if 
not quite, impossible to devise any system or scheme of duties 
upon imports that will not to a greater or less degree either 
injure or benefit private industrial interests, and I have never 
hesitated to say that I would rather benefit them than injure 
them ; but what I mean to assert is that when the primary or 



FREE TRADE — CARLISLE. 441 

principal object of the tax imposed by public authority is to 
foster a private interest it is not a legitimate use of the 
power of taxation, but is simply spoliation. Whether what 
is called protection, direct or incidental, is or is not really 
beneficial to protect industry is a question about wbicb I im- 
agine there will never be anything like perfect unanimity of 
opinion. But whatever may be our opinions upon that ques- 
tion, most of us will agree, I think, that there may be condi- 
tions under which it might not be wise to make a sudden 
change, even from a bad policy to a good one, 

NEED OF CONSERVATIVE ACTION. 

When manufacturing interests have grown up under a 
high protective system, and in a series of years have adjusted 
themselves to it, and when those engaged in them have be- 
come accustomed to rely upon the bounty of the Govern- 
ment for support, it might be injurious and even disastrous 
to them to suddenly repeal or greatly reduce the duties. 
Such a course would seriously alarm many who have em- 
ployed their capital in these enterprises, and when capital is 
really alarmed, even though it be without cause, the result, 
for the time being at least, is the same as if there were really 
danger. For these reasons, if there were no others, it has 
always been my opinion that it is the duty of Congress to 
proceed carefully and conservatively in its legislation on this 
subject — having due regard at every step to the large inter- 
ests involved. In other words, I am in favor of a reforma- 
tion, not a revolution. But, Mr. President, this process of 
reformation must go on until the power of taxation is used 
only for proper purposes. There must be no step backward 
— nor any deviation from correct principle and sound policy. 
As I have already briefly intimated, this federal union is a 
commercial as well as a politiQal one. Politically we are 
free; commercially we are not. 
19* 



442 FREE TRADE — CARLISLE. 

A STRANGE PERVEESION OF PRINCIPLES. 

When our ancestors determined to rebel against the Brit- 
ish system of government in America one of the principal 
causes alleged in the Declaration of Independence was that 
it had cut off their trade with all parts of the world. Is it 
not strange, my friends, that the Government estabhshed 
^ over this people by the same men will persist in the main- 
1 tenance of a policy which must ultimately produce sub- 
stantiaUy the same result — namely, the cutting off of our 
trade with aU parts of the world? Let us see to it the 
foundation for such an accusation against the Government 
of the Union is remarked as speedily as circumstances will 
admit. Taxation only for the purpose of raising revenue 
for the public use; commercial regulation in time of peace, 
only for purposes of protecting and fostering legitimate 
trade, will strengthen the Union, insure the prosperity of 
the people, and perpetuate the system of Government under 
/ which we live. 

For myself, Mr. Chairman, I will cheerfully cooperate 
with aU men and all organizations, by whatever name they 
may be known, in aU proper efforts to bring about this grand 
result. 



CHAPTEE XXVII. 

FREE TRADE FOR SHIPPINa. 
By Hon. James G. Blaine, LL.D. 



"T'T""7^HEN you build a ship for the commerce of the 
VV world, you send it abroad to compete with every 
other ship in every other country. You are unable by your 
laws to give her any protection or to prevent the greatest 
competition from every other nation in the world. When 
fou protect your manufactures at home by laying on a duty 
upon the same manufacture of other countries, why, sir, you 
shut out the entire competition of the world. If you levy 
an internal revenue tax upon our manufactures here, you at 
the same time raise the tariff duty in order that the internal 
tax may not depress the home manufacture or give an ad- 
vantage to the foreign article. You raise the tariff in order 

that you may shut out foreign competition 

I say further, Mr. Speaker, that I object entirely to this 
being considered a bounty to the ship-builder. I object 
utterly to it. I deny it. I deny that it is a bounty. I say 
that all the ship-builders ask is to be relieved from these 
burdens. There is a wide distinction in the logic and state- 
ment of the case. You find no protection to these ships. If 
I build a ship on the banks of the Kennebec, send her to 
Liverpool, and she meets a ship from the banks of the St. 
John, or from any other part of the world, now what pro- 

(443) 



444 FREE TRADE FOR SHIPPING. 

tection do your laws give her over the foreign ships? What 
protection do you give her? Not the shghtest in the world. 

There is one fact further which gentlemen ignore entirely, 
and that is the freights of these ships are in many instances 
more valuable than the cargoes they carry, the immense 
trade carried in American bottoms from the Chinch a Is- 
lands, the guano trade, there the freights were uniformily 
worth more than the cargo itself. To-day the vast amount 
of freights for the transportation of British coal amounts to 
more than the cargo. It is on freights that Great Britain is 
growing rich and drawing to herself the riches of the 
world. Yet we stand here haggling over the remission of a 
little bit of duty which is insignificant compared with the 
millions of freights we might have in our grasp if we gave 
any fair encouragement to our commerce. 

June 17, 1868. 

FKEE BREAD AND FEEE LUMBER. 

In the first place, let me say that during the entire war, 
when we were seeking everything on the earth, and in the 
skies, and in the waters under the earth, out of which taxa- 
tion could be wrung, it never entered into the conception of 
Congress to tax breadstuffs — never. During the most press- 
ing exigencies of the terrible contest in which we were 
engaged, neither bread stuffs nor lumber ever became the 
subject of one penny of taxation. It was not because of 
the influence of the rich grain dealers at Chicago, or Toledo, 
or Milwaukee. It was because if anything be universal, 
breadstuff s are universal; for they constitute literally ''the 
staff of life." If you impose on them a tax ever so small 
in amount it will be made a pretext by the very speculators 
of whom gentlemen talk for adding an appreciable amount 

to the cost of a barrel of flour Now as to the article 

of lumber, I again remind the House that there never has 



FREE TRADE FOR SHIPPING. 445 

been a tax upon this article. The gentleman from Ohio 
may talk of this question as he pleases; but I say that 
wherever the western frontiersman undertakes to make for 
himself a home, to till the soil, to carry on the business of 
life, he needs lumber for his cabin; he needs lumber for his 
fence; he needs lumber for his wagon or cart; he needs 
lumber for his plow; he needs lumber for almost every pur. 
pose in his daily life. 
June 10, 1868. 



CHAPTEE XXYIIL 

"SOMETHING ELSE."* 

By M. Feederio Bastiat. 
Member of the Institute of France. 



'TT'T'HAT is restriction? A partial proliibition. What 
VV is prohibition? An absolute restriction. So that 
what is said of one is true of the other? Yes, compara- 
tively. They bear the same relation to each other that the 
arc of the circle does to the circle. Then if prohibition is 
bad, restriction cannot be good ? No more than the arc can 
be straight if the circle is curved. 

"What is the common name for restriction and prohibition? 
Protection. What is the definite efect of protection? To 
require from men harder labor for the same result. Why are 
men so attached to the protective system? Because, since 
liberty would accomplish the same result loith less lahor, this 
apparent diminution of labor frightens them. Why do you 
say apparent f Because all labor economized can be devoted 
to something else. What? That cannot and need not be 
determined. Why? Because, if the total of the comforts 
of France could be gained with a diminution of one-tenth 
on the total of its labor, no one could determine what com- 
forts it would procure with the labor remaining at its dispo- 
sal. One person would prefer to be better clothed, another 
better fed, another better taught, and another more amused. 

Explain the workings and effect of protection. It is not 
an easy matter. Before taking hold of a complicated in- 

* Sophisms of Protection; G. P. Putnam's Sons, N. Y. 

(446; 



SOMETHING ELSE." 447 



stance, it must be studied in the simplest one. Take the 
simplest you choose. Do you recollect how Robinson Cru- 
soe, having no saw, set to work to make a plank? Yes. He 
cut down a tree, and then with his axe hewed the trunk on 
both sides until he got it down to the thickness of a board. 
And that gave him an abundance of work ? Fifteen full 
days. What did he live on during this time ? His provis- 
ions. What happened to the axe? It was all blunted. 
Very good; but there is one thing which, perhaps, you do 
not know. At the moment that Robinson gave the first 
blow with his axe, he saw a plank which the waves had cast 
up on the shore. Oh, the lucky accident! He ran to pick 
it up? It was his first impluse; but he checked himself, 
reasoning thus: ''If I go after this plank, it will cost me 
but the labor of carrying it and the time spent in going to 
and returning from the shore. But if I make a plank with 
my axe, I shall in the first place obtain work for fifteen 
days, then I shaU wear out my axe, which will give me an 
opportunity of repairing it, and I shall consume my provis- 
ions, which will be a third source of labor, since they must 
be replaced. Now, labor is wealth. It is plain that I will 
ruin myself if I pick up this stranded board. It is import- 
ant to protect my personal labor, and now that I think of it, 
I can create myself additional labor by kicking this board 
back into the sea." 

But this reasoning was absurd I Certainly. Nevertheless 
it is that adopted by every nation which protects itself by 
prohibition. It rejects the plank which is offered it in 
exchange for a little labor, in order to give itself more labor. 
It sees a gain even in the labor of the custom-house ofiicer. 
This answers to the trouble which Robinson took to give 
back to the waves the present they wished to make him. 
Consider the nation a collective being, and you will not find 
an atom of difference between its reasoning and that of Rob- 
inson. Did not Robinson see that he could use the time 
saved in doing something else ? What ^' something else " ^ 



448 



So long as one has wants and time, one has always some- 
thz7ig to do. I am not bound to specify the labor that he 
could undertake. I can specify very easily that which he 
would have avoided. I assert that Robinson, with incredi- 
ble blindness, confounded labor with its result, the end with 
the means, and I will prove it to you. It is not necessary. 
But this is the restrictive or prohibitory system in its simplest 
form. If it appears absurd to you, thus stated, it is because 
the two qualities of producer and consumer are here united 
in the same person. 

Let us pass, then, to a more complicated instance. Will- 
ingly. Some time after all this, Robinson having met Friday, 
they united and began to work in common. They hunted 
for six hours each morning and brought home four hampers 
of game. They worked in the garden for six hours each 
afternoon, and obtained four baskets of vegetables. One 
day a canoe touched at the Island of Despair. A good-looking 
stranger landed and was allowed to dine with our two 
hermits. He tasted, and praised the products of the garden, 
and before taking leave of his hosts, said to them: '^Gener- 
ous Islanders, I dwell in a country much richer in game 
than this, but where horticulture is unknown. It would be 
easy for me to bring you every evening four hampers of 
game if you would give me only two baskets of vegetables." 

At these words Robinson and Friday stepped on one side 
to have a consultation, and the debate which followed is too 
interesting not to be given m extenso : Friday — Friend, what 
do you think of it ? Rolinson — If we accept, we are 
ruined. Friday — Is that certain ? Calculate ! Rolinson — 
It is all calculated. Hunting, crushed out by competition, 
will be a lost branch of industry for us. Friday — What dif- 
ference does that make if we have the game ? Robinson — 
Theory ! It will not be the product of our labor. Friday — 
Yes it will, since we will have to gyve vegetables to get it. 
Rolinson — Then what shall we make? Friday — The four 



449 



hampers of game cost us six hours' labor. The stranger 
gives them to us for two baskets of vegetables, which take 
us but three hours. Thus three hours remain at our disposal. 
Robinson — Say rather that they are taken from our activity. 
There is our loss. Lahor is wealth, and if we lose a fourth 
of our time we are one-fourth poorer. Friday — Friend, you 
make an enormous mistake. The same amount of game and 
vegetables and three free hours to boot make progress, or 
there is none in the world. RoUnson — Mere generaUties. 
What will we do with these three hours ? Friday — We 
will do something else. Robinson — Ah, now I have you. You 
can specify nothing. It is very easy to say something else — 
something else. Friday — We will fish. We will adorn our 
houses. We will read the Bible. Robinson — Utopia! Is 
it certain that we will do this rather than that ? Friday — 
Well, if we have no wants, we will rest. Is rest nothing ? 
Robinson — When one rests one dies of hunger. 

' Friday — Friend, you are in a vicious circle. I speak of a 
rest which diminishes neither our gains nor our vegetables. 
You always forget that by means of our commerce with this 
stranger nine hours of labor will give us as much food as 
twelve now do. Robinson — It is easy to see that you were 
not reared in Europe. Perhaps you have never read the 
Moniteur Industriel? It would have taught you this: ''AH 
time saved is a dear loss. Eating is not the important mat- 
ter, but working. Nothing which we consume counts if it 
is not the product of our labor. Do you wish to know 
whether you are rich ? Do not look at your comforts, but 
at your trouble." This is what the Moniteur Industriel would 
have taught you. I, who am not a theorist, see but the loss 
of our hunting. 

Friday — What a strange perversion of ideas. But — 
Robinson — No buts. Besides, there are political reasons for 
rejecting the interested offers of this perfidious stranger. 
Friday — Political reasons I Robinson — Yes. In the first place, 



450 " SOMETHING 



he makes these offers only because they are for his advantage. 
Friday — So much the better, since they are for ours also. 
Rohinson — Then by these exchanges we shall become 
dependent on him. Friday — And he on us. We need his 
game, he oiir vegetables, and we will live in good friendship. 
Rohinson — Fancy! Do you want I should leave you without 
an answer ? Friday — Let us see; I am still waiting a good 
reason. Rohinson — Supposing that the stranger learns to 
cultivate a garden, and that his island is more fertile than ours. 
Do you see the consequences ? Friday — Yes. Our relations 
with the stranger will stop. He will take no more vegeta- 
bles from us, since he can get them at home with less trouble. 
He will bring us no more game, since we will have nothmg 
to give in exchange, and we will be then just where you 
want us to be now. Rohinson — Short-sighted savage! You 
do not see that after having destroyed our hunting by inun- 
dating us with game, he will kill our gardening by over- 
whelming us with vegetables. Friday — But he will do that 
only so long as we give him something else ; that is to say, so 
long as we find something else to produce, which will econo- 
mize our labor. Rohinson — Something else — something else ! 
You always come back to that. You are very vague, friend 
Friday, there is nothing practical in your views. 

The contest lasted a long time, and, as often happens, left 
each one convinced that he was right. However, Robinson 
having great influence over Friday, his views prevailed, and 
when the stranger came for an answer, Robinson said to him: 
'^ Stranger, in order that your proposition may be accepted, 
we must be quite sure of two things: The first is that 
your island is not richer in game than ours, for we will 
struggle but with equal arms. The second is, that you will 
lose by the bargain. For, as m every exchange there is 
necessarily a gainer and a loser, we would be cheated if you 
were not. What have you to say ? " " Nothing, nothing," 
replied the stranger, who burst out laughing, and returned 
to his canoe. 



CHAPTER XXIX. . 

FREE TRADE. 
By Prof. Emile De Laveleye.* 



A MERCHANT on being asked by the French states- 
man, Colbert, what was the best way of favoring 
commerce, made answer: "Leave it alone;" and this reply 
of his has become the watchword of the supporters of free- 
dom of trade, or, as it is sometimes called, free exchange. 
What, in fact, can be more natural than to allow every one 
to buy and sell where he can do so most advantageously, 
whether in or out of his own country ? 

To raise a revenue, a State is still justified in imposing 
custom dues on the importation of certain foreign goods, 
though the tax is a bad one; but to establish these duties 
under the pretext of protecting national industries is an 
iniquitous measure, fatal to the general interest. By forcing 
consumers to buy from the protected manufacturers at 
higher prices than they would elsewhere have to pay, the 
gross injustice is committed of taxing one class for the 
benefit of another. It is in this that the system of protection 
consists. If it be said that the object is to favor labor, and 
consequently laborers, a double error is committed. 

Error the First. — The aim of economics is not to increase 
but to diminish labor. If I can obtain a yard of cloth from 
a foreigner by means of one day's work, it is contrary to this 
aim to force me to spend two. The eagerness to ijacrease 

*Elements of Political Economy. New York, G. P. Putnam's Sonp, 1884. 

(451) 



452 FREE TRADE — LAVELEYE. 

labor without augmenting production has been well called 
"Sisyphism," for it chains humanity to efforts that lead to 
no result, just as Sisyphus was compelled to roll to the 
summit of a hill a stone that always fell back again. The 
goal we should pursue is the increase of commodities and 
diminution of toil. 

Error the Second. — No service, but an injury, is done to 
workmen in thrusting them into manufactories by force of 
law and in spite of nature. Thus in the case of Italy it is a 
thousand pities that the custom house should have snatched 
workmen and workwomen from their open air tasks in this 
lovely country with its genial climate, to chain them in 
gloomy work-shops for twelve or fourteen hours a day to the 
monotonous movements of machines. 

Free trade by applying to whole peoples the principle of 
the division of labor, assures them all the benefits it can 
bestow, and thus greatly increases their welfare.'^ If in a 
family each member is employed at what he can do best, it 
is clear that the total product, and consequently the indi- 
vidual shares, will be as great as can be attained. On the 
contrary, if each is forced by legislative restrictions to 
devote a part of his time to a labor for which he has no 
aptitude, each and all will be worse off. Apply this princi- 
ple to nations, and it is plain that when each country devotes 
its energies to the tasks which its nature most favors, not 
only will it bring to the international market the maximum 
of products obtained with the minimum of toil, but the 
welfare of humanity at large will be increased in proportion 
to the increase of the productivity of each country's labor. 
, A man who, in the wish to be self-sufficing, should 
constrain himself to manufacture everything he needed, 
food, clothing, furniture, and books, would plainly be ex- 
tremely foolish, nor is a nation that imitates him any wiser. 

If the soil of my fann is sandy, and so better suited for 
rye than for wheat, the least laborious way of obtaining 



FREE TRADE — LAVELEYE. 453 

wheat is, not to cultivate it myself, but to ask for it in 
exchange for my lye of those who have a clay soil. This 
plain truth demonstrates the absurdity of the system of 
protection which would oblige me to grow wheat even upon 
sand. 

The upholders of protection make the further objection 
that foreigners will inundate us with their produce. Such 
a fear is quite idle, since foreigners will not give us their 
goods for nothing, but will be wilhng to take ours in pay- 
ment. Commerce is always an exchange of produce against 
produce. So much imported, so much exported. If imports 
exceed exports, all the better; the foreigner is paying us a 
tribute, and we shall have more to consume. If exports 
3xceed imports, all the worse, it is now we who are paying 
d, tribute. Here, however, we are touching on the difiBcult 
question of the balance of commerce, the discussion of 
which we defer to a later paragraph. 

Protectionists are anxious to sell much and buy little, in 
order that the foreigner may be forced to pay the excess of 
his purchases in cash. These aims involve a great contra- 
diction. It is clearly impossible for the different countries 
in their exchanges with one another always to sell more than 
they buy. 

The principal cause of industrial progress in a country, 
IS, as we have seen, the competition between manufacturers, 
each of whom strives to improve, and, above all, to cheapen, 
his fabrics, in order to extend his business. The more 
widely competition is extended, the greater will be every- 
one's profit. Do not, therefore, limit it by the frontiers of 
a state, but extend it from country to country. Monopoly 
begets sloth, and protection, routine. On the other hand, 
the manufacturer who is forced to carry everything to per- 
fection in endeavoring to keep his hold of the home market 
will conquer that of the world. 

A railroad uniting two countries facilitates exchanges. 



454 PEEE TRADE — LAVELEYE. 

Custom dues on foreign goods impede them. Yet the same 
men at the same time support two policies, the results of 
which are thus completely diverse. That Frenchmen and 
Italians, after spending nearly two millions sterling in boring 
a tunnel through the Alps, can place their custom-house 
officers at each end to destroy in a great measure by the 
dues they exact the usefulness of this marvel of engineering, 
is an inexplicable contradiction. 

To be consistent, a protectionist should demand the. 
destruction of machines, for machines and free trade have 
as their common result the diminution of the labor neces- 
sary to obtain an object. Thanks to machinery I obtain my 
coal at less expense ; thanks to the stranger I again obtain 
it cheaper; the result is identically the same. If we exclude 
the foreigner we should also break our machines; and thus 
increase in both ways the amount of labor requisite to obtain 
a given quantity of coal. 

Capital turns spontaneously to the most lucrative field of 
employment. Protection diverts it from these to the less 
lucrative, compensating it for the difference by a tax levied 
on consumers, by the amount of which tax production is 
again diminished. 

As their last argument protectionists maintain that for 
objects of the first necessity, such as corn and iron, a 
country should be independent of foreigners, lest, in case 
of war, it should find itself without the means of nourish- 
ment or defense. There is no example, however, of a 
people having lacked necessaries in war time, and to-day 
there is even less cause for fear than formerly. In the first 
place railways facilitate revictualling ; in the second, since 
the Treaty of Paris, in 1856, the ships of neutrals may 
continue to transport the goods of belligerents. The com- 
plete blockade of a state is thus more impossible than ever; 
and it is the height of folly to inflict a permanent and 
certain harm in order to avoid a distant and more than 
improbable one. 



CHAPTER XXX. 

TARIFF AND WAGES.* 

By F. W. Taussig, 
Instructor in Political Economy in Harvard College. 



THE general question of free trade and protection has 
been treated in a previous chapter (Book III, Chapter 
VI). One argument for protection was not mentioned there, 
which is much urged by protectionists in the United States 
— the argument that protection is necessary to maintain the 
high wages paid in this country. It is said by the advocates 
of protection that the competition of articles made by ill-paid 
laborers in Europe would reduce, if free trade were estab- 
lished, the prices of articles made in this country, and that 
wages must fall correspondingly. Professor Laveleye does 
not mention this argument, because it is not advanced by 
protectionists in Europe. On the contrary, in Germany and 
France high duties are demanded in order to protect the 
ill-paid laborers of those countries from the competition 
of the better -paid laborers of England. This fact shows 
suflQciently that low wages in themselves do not enable a 
country to compete in another country, and that high wages 
do not prevent it from competing; otherwise England could 
not compete on the continent of Europe. The truth of the 
matter in this country is, that in those branches of industry 
to which we can most advantageously direct our labor and 
capital, the laborers produce a large product, and employers 

* Supplementary Chapter in Laveleye''s Political Economy. 

(455) 



456 TARIFF AND WAGES — TAUSSIG. 

can afford to pay them high, wages. If in a given branch 
of industry, these high wages cannot be afforded, this indus- 
try is one which it is not advantageous for our country to 
undertake. Agricultural laborers in the United States are 
paid much higher wages than such laborers receive in any 
European country. Yet nobody believes that the wheat and 
grain produced by the ill-paid laborers of Europe can be 
imported hither in competition with our own wheat and 
grain; everybody knows that, on the contrary, we export 
these products to Europe. The reason is that the United 
States have great advantages for raising agricultural prod- 
ucts; hence high wages are and can be paid to the laborers 
producing them. The general high rate of wages with us 
is due fundamentally to the great general productiveness of 
labor, which, again, is due in part to the energy and effi- 
ciency of our laborers, in part to the extended use of 
machinery, and in a very large part to our great natural 
resources. It is in no sense due to the protective policy. If 
in making particular commodities, for instance, silk goods, 
such high wages cannot be paid to laborers under a system 
of free trade, it is a proof that it is not worth while for us 
to make silks. We can get laborers in Europe to make 
silks for us at the low rates of pay which prevail there. We 
can employ our own laborers, who are nov/ making silks, in 
producing other commodities — for instance, grain or cotton 
goods. In producing the grain or cottons our laborers are 
advantageously employed; and in exchange for these com- 
modities we can get from the foreign laborers more silks 
than our domestic laborers can produce at home. 



CHAPTER XXXI. 

FREE TRADE SHOULD BE THE ULTIMATE END 
AND AIM OF TARIFF LEGISLATION.* 

By Ex-Presidext James A. Garfield. 



I STAND now where I have always stood since I have 
been a member of this House. I take the liberty of 
quoting, from the Congressional Globe of 1866, the following 
remarks which I then made on the subject of the tariff : 

" We have seen that one extreme school of economists 
would place the price of all manufactured articles in the 
hands of foreign producers by rendering it impossible for 
our manufacturers to compete with them; while the other 
extreme school, by making it impossible for the foreigner to 
sell his competing wares in our market, would give the 
people no immediate check upon the prices which our manu- 
facturers might fix for their products. I disagree with both 
these extremes. I hold that a properly adjusted competition 
between home and foreign products is the best gauge by 
which to regulate international trade. Duties should be so 
high that our manufacturers can fairly compete with the 
foreign product, but not so high as to enable them to drive 
out the foreign article, epjoy a monopoly of the trade, and 
regulate the price as they please. This is my doctrine of 
protection. If Congress pursues this line of policy steadily, 
v/e shall, year by year, approach more nearly to the basis of 
free trade, because we shall be more nearly able to compete 

* U. S. House of Representatives, April 1, 1870. 
20 (457) 



458 FEEE TRADE GARFIELD. 

witli other nations on equal terms. I am for a protection 
wMcli leads to ultimate free trade. I am for that free trade 
whicli can only be achieved through a reasonable protection." 

Mr. Chairman, examining thus the possibihties of the 
situation, I believe that the true course for the friends of 
protection to pursue is to reduce the rates on imports wher- 
ever we can justly and safely do so, and, accepting neither 
of the extreme doctrines urged on this floor, endeavor to 
establish a stable policy that will commend itself to all 
patriotic and thoughtful people. 

Modeieii scholarship is on the side of free trada 



CHAPTER XXXII. 

TARIFF REFORM.* 
By Hon. William R. Morrison. 



INFORMATION comes to us from the executive branch 
of the Government that the people are burdened with 
unnecessary taxation, and contribute annually large sums to 
the public Treasury not necessary for public use. The 
Treasury estimate of annual surplus may be fairly stated at 
$50,000,000. Of this needless taxation and" surplus, with 
their attendant aggravate evil, we cannot fail to relieve the 
people without flagrant disregard of public duty. It is not 
claimed that the bill reported by the committee will afford 
all the relief demanded by the people's representatives. It 
is but an advance toward and a promise of more complete 
revenue reform, to attain which a general revision of the 
tariff and a more equitable adjustment of rates on its long 
list of dutiable articles is essential. Such a revision and 
adjustment was believed to be unattainable at the present 
session of Congress. A bill was therefore reported, having 
for its chief purpose the reduction of taxes. 

To protectionists any measure is without harmony and 
without merit which deprives the favorites of any bounty, 
though such measure but responds to the statement of the 
fiscal officers of the Government that ''the question still 
presses, What legislation is necessary to relieve the people 
of unnecessary taxes?'* A reduction ''alike" or horizontal 

* House of Eepresentatives, April 15, 1884. 

(459) 



460 TARIFF REFORM — MORRISON. 

is not the most logical at best, but none other was prac* 
ticable. The late revision, after leaving the hands of the 
manufacturers and their tariff commission, was completed 
in a conference, of which three leading members were 
Messrs. Morrill, Kelley, and Sherman, who have made all 
the tariffs of the past twenty-five years. They are the 
chief architects of the present system, and it will not be 
lightly said by the friends of the system that the revision, 
as it came from such hands, was not consistent ' and har- 
monious. They laid some duties as low as ten, others as 
high as one hundred per cent, and higher. These are to be 
reduced twenty per cent., or to eight and eighty. Eelatively 
they remain the same; to the people they will be a little 
lighter. 

Gentlemen are disturbed lest revenues will increase under 
the bill. Professedly they are alarmed at the possibility of 
taking less of the people's earnings while putting more 
money in the people's treasury. The enactment of a law 
that would accomplish this should not be classed among 
national calamities. 

The year 1860 was a time of plenty. The laborer for 
wages was, at least, as well, and the grower of grain better, 
paid than they are in this year (1884), and in that year 
(1860) of bounteous -plenty, our importations of foreign 
goods were less to the person, or in proportion to population 
than in the years 1880-2. 

ABUSES OF THE PRESENT TARIFF. 

To the list of articles now imported free of duty, amount- 
ing to nearly one-third of all our importations, it is proposed 
to add salt, coal, wood, and lumber. Salt is already freed 
from tax for fishermen, also for the exporters of meats, to 
lessen the cost of food to the people of other countries — 
not for our own. Coal is untaxed for use on vessels ha^nng 
bv law the exclusive right to the coasting trade or engaged 



TARIFF REFORM MORRISON. 4G1 

in the foreign carrying trade, a privilege denied to persons 
engaged in otlier pursuits. The revenue from wood and 
lumber imported, and hereafter to be admitted free of duty, 
has in the ten years last past not much exceeded $10,000,- 
000. The census returns show the domestic wooden pro- 
ducts to exceed $500,000,000 per annum. If the average 
duty of twenty per cent, on the imported woods adds but 
ten per cent, to the price of that produced here its increased 
cost to the people has been $500,000,000 in ten years. In 
these ten years, under the pretence of taxing this article 
to secure $10,000,000 of revenue, we have compelled the 
people to pay $500,000,000 in bounty to encourage the 
destruction of forests and the felKng of trees, and in the 
same time we have given more than 18,000,000 acres of 
land under the Timber Culture Act as bounty to encourage 
the planting of other trees and other forests. 

In the estimates made by a clerk of experience in the 
Bureau of Statistics, which actual payments on importations 
show to be but estimates, though based on of&cial data, the 
bill would leave, it appears, in the cottons but two articles 
of cotton yarns, not the finest, dutiable above forty per 
cent.; in woolens but one — coarse carpet wool, which we 
do not produce — above sixty per cent., and in iron and 
steel but few above fifty per cent. These rates have been 
fixed as the limit, above which on these articles no duty 
shall be collected. The present rate on the finest cotton is 
forty per cent., and yet it is an unquestioned fact, as shown 
by invoices and payments made, that duties exceeding one 
hundred per cent, (exceeding the first cost), are exacted and 
paid on cotton goods, the duty upon which is in the esti- 
mates referred to, stated to be less than twenty per cent. 
The same is true of iron and steel in different degrees. In 
the woolen schedule these abuses are more glaring. In all 
they result from enormities hidden and concealed, both in 
classification of articles and rates of duty. The limit of 



462 TARIFF REFORM — MORRISON; 

forty, fifty, and sixty per cent, on the cotton, metal, and 
woolen schedules is intended to expose and remedy these 
hidden enormities. 

Those really desirous of affording some relief from exist- 
ing abuses will not fail to find their opportunity in removing 
taxes yielding $8,000,000 on sugar, as much on cotton and 
woolen goods, and $14,000,000 on other articles used in 
every home. 

DECEPTIVE CHAEACTEE OF THE LATE EEVISION. 

The insufficient, not to say deceptive character of the late 
revision, the manner of making it, and the circumstances 
attending its adoption, alike forbid that it should be perma- 
nent. TVhien it was being forced upon the country with 
assumptions and assurances which have not been verified, I 
warned its authors it would give no contentment to the 
public mind and no rest from agitation, because it did not 
afford the relief admitted to be a measure of justice by the 
commission packed to perpetuate existing abuses. I said 
then that its authors, in and out of Congress, but deceived 
themselves if they expected from this measure so much as 
a temporary settlement. In a speech made in January last 
at Columbus, Ohio, Delano, a protectionist, long a member 
of Congress and a member of President Grant's Cabinet, 
said substantially that of his own personal knowledge the 
Tariff Commission was secured by the manufacturers, whose 
salaried agent they caused to be made its president, and, as 
their agent here, after his and his employers' commission 
had made its report (his own report), he secured many 
changes in it, greatly to the advantage of manufacturers. I 
hardly need say that a revision procured through such 
agencies and methods is entitled to no respect whatever. 

It is correctly said that a tariff too low necessitates change 
to obtain needed revenue. It is equally true that when too 
high, as ours now is, change is necessary to avoid a surplus 



TARIFF REFORM — MORRISON. 463 

from imports in whicti the duty is not prohibitory. The 
only security from agitation and change, therefore, is to 
confine the taxing power to its rightful purpose by obtain- 
ing revenue limited to the necessities of the Government. 
When no more revenue is needed by the Government of 
the people it has attained the limit of its power to tax the 
people. 

Estimates based on the census statistics show that as many 
as 18,000,000 of our people do some work or are occupied 
in some business, and that the average earnings of at least 
16,000,000 of these do not much exceed three hundred dol 
lars, and is wholly consumed in means of daily subsistence. 
They, too, are the millions who in shop and field strike the 
blows of all production. All the accumulation of and 
boasted additions to our national and individual wealth 
go to one-tenth of those who earn it, and of these a few 
appropriate the great mass of the savings of the people, and 
are enriched by the profits of the labor of other men. Like 
estimates will show that the few who profit most from the 
labor of all contribute little under this system of unequal 
taxation — not more than two per cent„ of their savings — 
while the great mass of the workers, including the depend- 
ent poor, pay the bulk of taxes, all of which is subtracted 
from their too scanty means of comfortable living. 

Ours is a very free country of very free men, both very 
freely taxed. In the same sense that we are free men in a 
free country, freely taxed, we may be correctly named free 
traders when we insist that the trade and commerce of the 
country and the necessities of comfortable living shall be 
freed from dll taxes not essential to the Government for 
public uses. 

The amount required from customs is dependent upon 
what may be received from internal revenue. The abolition 
of internal revenue means free and cheaper liquors, but 
with heavier taxed and higher priced sugar and other 



464 TARIFF REFORM — MORRISON. 

articles essential in every household. I am not called upon 
to defend the system, which has many abuses. Of the two 
systems it is the cheaper in administration — immensely 
cheaper in its results. The spies and informers complained 
of are common to both. So offensive is the import system 
that gentle women are required for its execution in part. 
The repeal of internal revenue means more than additional 
cost of living and privation to the poor. It means a per- 
manent public debt which few owe and many pay, and 
which corrupts administration. While we cannot doubt the 
existence of great wrongs in the execution ' of internal 
revenue laws, especially in the South Atlantic States, many 
of these may be cured. Neither is it because of these 
abuses of administration that the abolition of the liquor and 
tobacco taxes is demanded in the States far north and sub- 
stantially free from these flagrant abuses. 

THE GREAT NAME OF JEFFERSON. 

Mr. Jefferson has been summoned here as often as four 
times in a single day and made to bear testimony to the 
" infernal " character of a tax on whisky. It was Mr. Jef- 
ferson who said : '' Public debt is a moral canker from which 
we ought to emancipate posterity." It was Mr. Jefferson 
who said: "Foreign spirits, wines, teas, coffee, cigars, and 
salt are articles of as innocent consumption as broadcloth 
and silks, and ought, like them, to pay but the average, the 
ad valorem duty of other imported comforts. All of them 
are ingredients in our happiness, and the Government which 
steps out of the ranks of the ordinary articles of consump- 
tion to select and lay under disproportionate burdens a 
particular one because it is a comfort, pleasing to the taste 
or necessary to health, and will therefore be brought, is in 
that particular a tyranny." 

It is a little singular that Mr. Jefferson should be so often 
summoned here to tell us so little when he knew so much. 



TARIFF REFORM — MORRISON. 4B5 

He was not made to bear witness to the moral canker and 
corrupting influence of a public debt or to say that all in- 
dustries are most thriving when left most free to individual 
enterprise; that taxes on consumption to be just must be 
uniform; that protection is only justifiable ''to foster for a 
while certain infant manufactures until they are strong 
enough to stand against foreign rivals, but when evident 
that they will never be so it is against right to make the 
other branches of industry support them." 

At the last session, while promising to reduce tariS taxes, 
these new disciples of Jefferson so increased them on manu- 
factures of iron and other metals, including cotton and 
other machinery, that the planter who exchanged one hun- 
dred bales of cotton for any of these manufactures must, on 
his return, surrender to the Government the foreign proceeds 
of forty-five for the privilege of selling or using that re- 
ceived in exchange for the other fifty-five bales. All makers 
of iron products, with their especial representatives, pro 
fessed reverence for the great name of Jefferson in contin- 
uance of this abuse. 

THE WAGE QUESTION THE OHIO PLATFORM. 

During more than half of the last ten years wages have 
been as low or lower than before the adoption of the taxing 
policy as a pretended means of making wages higher. They 
are ' lower still when compared with the use which those 
who earn wages are compelled to make of them, for they 
must use them to obtain the means of comfortable living. 
Counted by what our laborers are able to accomplish and 
produce in quantities, and especially in values, wages here 
are but little more in many industries than the wages paid 
by our chief commercial rivals. 

There is but one horizontal reduction for which our oppo- 
nents are willing to legislate — the reduction of wages — and 



466 TAEIFP REFOEM — MORRISON. 



this their favorites, with or without regard to legislation, 
are now executing day by day with cruel regularity. 

In the opinion of the minority members of the committee, 
representing, as they do, the friends of the prevaihng poUcy, 
the qure for whatever of national ills exist, so far as they 
result from taxation, is to be found m higher-priced clothing 
and other articles useful in fields, mmes, and homes; for 
that is what is meant by higher-taxed wool, fence-rods, cot- 
ton bands, and tin plates. Some of our friends here would 
cure the ills of overtaxation with a declaration of purpose, 
the execution of which they would carefully avoid. And 
here is the declaration. It is called the Ohio platform : — 

'' We favor a tariff for revenue Lunited to the necessities 
of government, economically administered and so adjusted 
in its application as to prevent unequal burdens, encourage 
productive mdustries at home, afford ]ust compensation to 
labor, but not to create or foster monopoly." 

A tariff for revenue hmited to the necessities of the gov- 
ernment is demanded by this plan of rehef. Is the tariff 
now so limited ? If not, then why refuse to limit it? Who 
among the representatives of the goodly people of that State 
who made this declaration believes it is so limited? Who 
among them believes the pending bill will reduce the reve- 
nue below the necessities of the Government? These are 
questions to which the plain people of the country want an 
answer. They will demand to know why tariff taxes are 
not removed in part if they are beyond the revenue limit. 
Do gentlemen expect to escape responsibility because rates 
are not rightly adjusted? The adjustment will be the same 
when reduction is made, but whatever of monopoly belongs 
to it will be fostered by twenty per cent, less than it now is. 

If this platform has an honest meaning it is that the 
tariff shall be lowered to a revenue basis. And gentlemen 
but deceive themselves who expect the people will be de- 
ceived by a refusal to legislate in accordance with this de- 



TARIFF REFORM — MORRISON. 467 

clared purpose. If the protection policy is to be tlie contin- 
uing policy of the Government it will be and ought to be 
intrusted to its friend, the Republican party. 

THE OLD, OLD STORY. 

Every argument in support of the protective policy is 
based on the assumption that any considerable tariff modifi- 
cation, especially a modification to the revenue basis, will 
destroy manufacturing industries, compel the abandonment 
of shops and mills and force those now engaged in them to 
other eijiployments. This is an old, old story. It was told 
of manufacturing industries in their infancy; it will be told 
when protection brings them to decay. Eight years ago I 
introduced the first bill for free quinine and providing for 
untaxed alcohol for use in making it. At once it was in- 
sisted that quinine making would become a lost art among 
us if such a bill should pass into a law, and it did not then 
pass. Later on, when the story of free quinine got among 
the people, another placed the bill before the House, omit- 
ting the free alcohol provision, and the bill became a law, 
protectionists themselves feeling obliged to vote for it. The 
great Philadelphia house did not go into decline, but con- 
tinued its business of quinine making successfully as the 
second largest quinine estabhshment in the world. So every 
legitimate industry would go on with a revenue tariff. 

DIFFEEENCE IN WAGES. 

It is insisted that wages are so much higher here than in 
the countries seeking our markets that revenue duties will 
not equalize the difference in the cost of production. Con- 
ceding the truth of what is not true, that the foreign rival 
must pay for the privilege of selling in our markets a sum 
equal to the -difference in wages to enable the home producer 
to sell with reasonable profit, let us see if revenue rates will 
compensate for that difference. The census value of manu- 



468 TARIFF REFORM — MORRISON. 

factures for ]880 was $5,369,579,191. The wages paid in 
making them were $947,953,795. The difference in cost of 
goods is said to be the difference in the cost of wages. But 
suppose the difference between the cost here and the cost 
abroad amounts to all the wages paid there then these man- 
ufactures would cost abroad $4,421,625,396. Suppose the 
average rate of duty which the bill before the House leaves 
at thirty-three per cent, were reduced to twenty-two per 
cent, and at that rate this $4,421,625,396 in value of goods 
was imported, it would cost the importer, at that rate of 
twenty-two per cent., $972,757,587, which not only makes 
up for the difference in wages, but exceeds all the wages 
paid for making all the goods. 

If those who claim especial friendship for manufacturing 
industries will insist on their going into decay and then 
dying some other apology must be found for their taking off 
than the removal of unnecessary taxes. 



CHAPTER XXXIII. 

BUSINESS DEPRESSION AND REVENUE REFORM. 

A Letter Addressed by Abram S. Hewitt to the 
Albany ''Argus" Dec. 26, 1883. 



New York, December 26, 1883. 

DEAR SIR: I am in receipt of your letter in whidi yon 
say: ''The Argus is now engaged in an inquiry into 
the causes and effect of the present depression of the iron 
industry. It is especially desired to be known what relation 
this state of thing bears to existing tariff conditions." You 
ask my opinion in reference to these points. 

I answer that the proximate cause of the present depres. 
sion of the iron industry is to be found in the fact that the 
capacity for producing iron is in excess of its actual con- 
sumption, not only in this country, but in those foreign coun- 
tries which are large producers of iron and steel. When 
the supply exceeds the demand prices fall. Establishments 
which cannot produce at the current prices without loss are 
compelled to suspend operations, and thus comes the actual 
depression to which you refer. The ultimate causes of such 
a state of things are unusually manifold; sometimes they are 
tob obscure to be discovered with certainty. For example: 
The influence of abundant harvests, or of a failure of crops, 
upon the general condition of industry is unquestioned. 
Yet these very causes may produce prosperity in some 
branches of business while they produce depression in others. 

(469) 



470 BUSINESS DEPRESSION AND REVENUE REFORM. 

So in regard to the influence of tariff legislation. If duties 
are suddenly raised at a time when there is a demand for 
the foreign product, prices will go up and the iron business 
will be prosperous. If, on the other hand, duties are re- 
duced, so as to admit of a larger supply of the foreign pro- 
duct, the domestic business will be, for the time being, un- 
favorably a:ffected, and depression will result. 

These, however, are only immediate and temporary effects. 
As a matter of fact, prior to 1878, under the highest tari:ff 
ever known in this county, we had a long period of depres- 
sion in the iron business. But about that time railway en- 
terprises were undertaken on a large scale, producing a sudden 
demand for more iron and steel than the world was prepared 
to supply. Prices advanced all over the world, and to these 
prices was added the very high rate of duty then prevailing 
upon foreign iron brought into this country. The profits of 
the domestic business became excessive, and the owners of 
existing works proceeded to enlarge their capacity to the 
utmost, in order to gather this harvest of great profits, while 
new capital was attracted into a field in which the returns 
were known to be abnormally large. The business being 
thus overdone, a glut of iron resulted, and the reaction has 
brought about a state of things even worse than that which 
existed prior to 1878. 

The evil from which we now suffer is, therefore, largely 
due to the fact that the war tariff imposed higher duties than 
were needed for protection, thus giving excessive profits to 
the manufacturers in a period when the profits would have 
been large enough without such high protective duties. We 
are suffering from unnatural stimulation, which aggravated 
the excitement when the public interest required that it 
should be allayed, and now aggravates the depression by the 
excessive capacity for production which it engendered. How 
long this depression will continue no man can predict. But 



BUSINESS DEPRESSION AND REVENUE REFORM. 471 

inasmucli as eras of prosperity and depression succeed each, 
other in cycles, it is certain that sooner or later we shall come 
again to the period when the demand for iron will exceed the 
supply. Unless our revenue legislation be meanwhile reform- 
ed, we shall then have a repetition of the experience through 
which we passed since 1878, an experience which shows that 
excessive profits are, in reality, of no real benefit either to 
the manufacturers, except in rare instances, or to the country 
at large, while the evils resulting from them are serious. 
They are especially injurious to the workingmen of the 
country, who are the chief sufferers when the inevitable re 
action to unnatural expansion narrows the field of employ 
ment for labor. 

The lesson to be derived from this experience is that the 
duties on all kinds of iron should never exceed the lowest 
possible point which, in time of depression, will protect the 
domestic market from the flood of foreign iron which other- 
wise might be poured into its lap. Such rates of duty, pro- 
vided they are specific, will on the average yield the largest 
amount of revenue, because when the price rises and the 
producer no longer needs protection, the consumer, who does 
need protection, can then supply his wants at a fair price 
in the foreign market without paying an increased duty, if 
he cannot get equally fair terms at home. 

Moreover, the experience of all commercial nations has 
shown that moderate specific duties afford the only safeguard 
against frauds in the revenue, as well from smuggling as 
from undervaluation in the invoices. The bhnd adherence 
to ad valorem duties in our existing tariff has only served to 
throw the importing trade into the hands of foreigners and 
to drive our reputable American houses from this business. 

The reduction of extra-protective duties to a reasonable 
standard of specific duties is therefore the only practicable 
means of avoiding an unhealthy expansion of business when 



472 BUSINESS DEPRESSION AND REVENUE REFORM, 

it is active. Extra-protective duties merely result m over- 
production, in the general derangement of industry, and in 
consequent suffering to tlie workmgmen by the loss of em- 
ployment and the reduction of wages. They must he made 
to realize that the only fund out of which their wages can 
be paid is produced by the money which is received for the 
product of industry. Out of this fund must first be paid 
the cost of the raw material and the next the remuneration 
for the capital employed m the work of production. What 
remains is the amount available for the payment of wages. 
Hence the cheaper we can get raw materials and capital the 
more we can pay for the labor engaged m manufactures. 
High rates of interest and high-priced raw materials mean, 
therefore, lower wages for labor, while cheap raw materials 
and cheap capital mean higher wages for labor. The work- 
mgmen thus have an interest direct and immediate, m remov- 
ing the duty from raw materials, as well in the. iron business 
as in every other branch of industry carried on m this 
country. By raw materials I mean fuel, all food products, 
all materials to which no process of manufacture has been 
applied, all metallic ores and all waste products which are 
fit only to be manufactured. 

So far as any relief can be provided by legislation for the 
existing state of affairs the remedy must be found, first, m 
freeing raw materials from all duties ; and, secondly, m im- 
posing rates of duty on manufactured products not more 
than sufficient to make good the difference in the amount 
paid for labor m the production of any given article m this 
country, as compared with the amount paid for the same 
labor in other countries with which we compete. For this 
purpose the incidental protection afforded by revenue duties 
will, as a rule, be found sufficient when any protection is 
needed. 

I am aware that this last proposition involves the protec- 



BUSINESS DEPRESSION AND REVENUE REFORM. 473 

tive idea to some extent, but to no greater extent than is ttie 
logical outgrowth of our past legislation. If we had never 
had protection we should not be required to pay any atten- 
tion to the question of rates of labor, which are the result, 
not of protection, but of other conditions entirely independ- 
ent of legislation. But the protective system has undoubtedly 
built up some branches of industry which otherwise might 
not, in consequence of the higher rate of wages, have 
existed. Inasmuch as this is their misfortune and not their 
fault, no sensible legislator would strike these industries 
down by the sudden abrogation of the protective system. 
We should, nevertheless, endeavor gradually to reduce its 
evils to a minimum, until in the progress of time it shall have 
given way, under natural laws, to a better and sounder con- 
dition of affairs. 

But in this assurance of inevitable progress there is to be 
found no justification for the further maintenance of duties 
which only tend to reduce the wages of labor without confer- 
ring benefit on any interest whatever; duties which only 
impair our ability to sell commodities in the open markets of 
the world, and hinder the natural and healthy growth of 
business. All such -unnecessary and hurtful obstructions 
should be removed without delay, and it will be a mockery 
of duty if Congress should fail to open the way to "freer 
trade " and wider markets for our products through any fear 
of consequences to politicians who have not the courage of 
their convictions, or have no other convictions than the 
desire for office. The mere politician follows public opinion; 
the true statesman instructs it. His constant aim should be 
to make clear to those who depend upon their daily labor for 
their daily bread the* real basis upon which their welfare 
rests, and then to trust to their intelligence and votes for 
support. Success on any other condition would be dishonor. 
Any party which expects to get power by playing the game 



474 BUSINESS DEPRESSION AND REVENUE REFORM. 

of ^'hide and seek " in politics does not deserve, and will not 
gain, the confidence of the country. 

The only living issue, then, between the two great political 
parties which divides the country, as I understand it, is this: 
whether the revenue system shall be reformed, and upon 
what basis of principle it shall be settled. 

The Eepublican party believes in the doctrine of protec- 
tion for the sake of protection. It insists that protective 
duties are constitutional, and are necessary in order to insure 
to the workingmen a fair remuneration for their labor. It 
would therefore impose duties as nearly prohibitory as possi- 
ble on articles produced in this country, and as a policy 
make free those articles which are not or cannot be produced 
here. 

The Democratic party insists that the Constitution merely 
provides for the imposition of duties for revenue, and not 
for protection, except so far as duties so imposed necessarily 
afford incidental protection; that protective duties cannot and 
do not favorably affect the general rate of wages; that legis- 
lation is powerless to permanently increase the remuneration 
for labor, although it may seriously impair it ; that protection 
can only divert labor and capital from more profitable into 
less profitable channels of industry. It recognizes, however, 
the fact that the protective system has been so long in force 
and is so intrenched in judicial construction as to make it 
idle now to raise the constitutional question; that the 
amount of capital and labor now engaged in the protected 
industries is too great to admit of any legislation likely to 
do them any real injury ; that the only reform now possible 
is in the reduction and removal of duties which are no 
longer needed to insure their continued existence ; that these 
excessive duties are in reality obstructive to their prosperity; 
that duties on raw materials should be removed, because 
such duties constitute a practical deduction from the wages 



BUSINESS DEPRESSION AND REVENUE REFORM. 475 

of labor. If the question were an open one the Democratic 
party would prefer to raise the public revenue by duties 
imposed upon articles not produced in this country, and 
trust to natural laws for the development of its industries. 
But the question is foreclosed by the great extent of the 
protected industries, replacing dead industries which other- 
wise would have thriven. 

The Democratic party recognizing the necessity, therefore, 
of reforming the tariff in such a way as not to deprive these 
industries of the incidental protection afforded by reasonable 
revenue duties, insists that the protective system shall not be 
enlarged, and believes that moderate duties producing, on 
the average of years, a sufficient revenue, are adequate for 
protection at the only times when protection is needed — that 
is, in bad times, when our foreign competitors would seek to 
get rid of their surplus product in our markets, which, con- 
sidering that an idle population is the greatest social calamity, 
we must then preserve, in order to give employment to our 
labor engaged in the protected industries; that at all other 
periods extra protective duties merely give excessive profits 
to one class at the expense of other classes, ending in over- 
production, stagnation of business, and irregular employment 
for labor, powerless to protect itself against the errors of 
legislation and selfish action of capital striving for unreason- 
able profits. The condition of the business of the country at 
this time is conclusive proof that the protective system can- 
not relieve either labor or capital from the consequences of 
overproduction, which is its legitimate result. 

Between the political parties representing these two oppos- 
ing views the country is soon to make its choice. The 
Repubhcan party offers no remedy for the policy which has 
produced the existing paralysis of industry. The Democratic 
party proposes to open the way to freer markets, fuller trade, 
and better wages, by abolishing the duties on raw materials 



476 BUSINESS DEPRESSION AND REVENUE REFORM. 

and removing the purely obstructive features of the tariff. 
If the Democratic House shall frame and pass a judicious 
measure of revenue reform, carefully adjusted to the actual 
condition of our suffering industries, and the Republican 
Senate shall refuse to concur, the issue will be fairly joined. 
The people can then decide whether the do-nothing party 
now in power shall be replaced by an administration which 
will remove the artificial harries to healthy progress. When 
this is done, and not till then, will the country realize that it 
is no longer an infant at nurse, but a veritable giant, only 
requiring "ample room and verge enough" for the free play 
cf its vast energies. Sincerely yours, 

ABRAM S. HEWITT. 



CHAPTEE XXXIV. 

THE FARMERS' QUESTION * 

By John L. Hayes, LL.D., 
President of the late Tariff Commission. 



FAEMING UNDER OUR PROTECTIVE SYSTEM NOT UNPROFITABLE. 

LEAVING for a moment the consideration of the 
"Golden Rule of trading" in its application to 
farmers, let ns consider the assertion of fact that the Ameri- 
can farmers pay more and get less than any land -tillers in 
the world. The fallacy of this statement consists in making 
nominal prices paid and received, and not actual balances, 
the tests of successful farming; but, as broadly made, it 
means nothing more nor less, and is intended to give no 
other impression than that farming in America yields less 
net results, or is more unprofitable, than in any other coun- 
try. This I do not hesitate to declare to be a palpable mis- 
statement. I assert that labor and capital employed in 
farming in America are more productive — that is, give to 
those pursuing it a greater capacity for consumption of gen- 
eral commodities — than in any country in the world. This 
I shall hereafter show is mainly due to our national or pro- 
tective policy. In no other country, to say nothing of 
abundant food, is the agricultural population so well clad, so 
well housed with dwellings so well furnished, and so well 
supplied with implements of labor, agricultural and mechan- 
ical, — in short, provided to such extent and variety with 
manufactured products of necessity or luxury. The testi- 
mony of foreigners visiting this country, and of our own 
citizens who have traveled abroad, establish this point. 

, * Extract from Tract in answer to Cobden Club Tract by ]\Iongredien. 

(477) 



478 



THE farmers' question. 



AGRICULTURAL IMMIGRATION. 

The comparative productiveness of American farming is 
demonstrated by the agricultural emigration to this country, 
especially from England, at the present time. The Earl of 
Derby declares that five millions of British people could 
emigrate with advantage. Consul -General Badeau says, in 
a report to our own Department of State, " There can be lit- 
tle doubt that a superior and increasing^ class of emigrants 
from the British Isles may be expected to arrive in the 
United States within the next few years. Men who have 
hitherto held small farms and tilled them successfully, earn- 
ing a small but certain livelihood, now, seeing the chances of 
competency disappearing, are already contemplating emigra- 
tion in large numbers." 11,646 farmers and agricultural 
laborers have emigrated to the United States from England 
in the last seven years, and 31,988 from the United King- 
dom in the last nine years.* Mr. Thomas Hughes, a member 



* Table showing the number of Farmers and Agricultural Laborers who have 
emigrated from the United Kingdom to the United States within the last nine years. 
(Prepared by the United States Bureau of Statistics.) 



Year ending 
June 30th. 


England. 


Ireland. 


Scotland. 


Wales. 


Isle of 
Man and 
Channel 
Islands. 


Great 
Britain, 

not 

further 

specified. 


Total 
for the 
United 
King- 
dom. 


1871 
1872 
1873 
1874 
1875 
1876 
1877 
1878 
1879 


'3,427 
2,282 
1,622 
1,552 
1,329 
1,179 
1,255 


1,286 

2,116 

2,862 

1,537 

1,050 

594 

564 

685 

733 


"542 
764 
434 
223 
334 
293 
375 


14 
15 
15 
21 
12 
15 
17 


3 
*3 


2,793 
3,042 


4,079 
5,158 
5,845 
4,601 
3,121 
2,393 
2,239 
2,172 
2,380 


Total, [ 
9 yrs. S 


11,646 


11,427 


2,965 


109 


6 


5,835 


31,988 



THE farmers' question. 479 

of Parliament and doubtless of the Cobden Club, with the 
Earl of Airlie and others of social distinction, is now visiting 
this country to establish an agricultui-al colony in Tennessee, 
not for common farmers, but to open a field of agricultural 
enterprise to the younger sons of British noblemen and gen- 
tlemen. Thus the class of men to which the members of the 
Cobden Club belong practically assert that there are no 
impediments in America to successful farming. 

SUCCESSFUL FARMING DUE LESS TO NATURAL ADVANTAGES 
THAN A WISE POLICY. 

It may be said that American farming is successful on 
account of our superior natural advantages of cheap and 
fertile land and favorable climate. To this I answer, 
although I anticipate a more extended argument, that these 
are advantages only when improved by a wise economical 
policy. In the sugar and coffee districts of Cuba, where 
Nature has lavished her richest gifts of soil and climate, 
there exists, in the opinion of a world-wide traveler, ''the 
most desperate and deplorable poverty on the face of the 
earth." The power of consumption of manufactured com- 
modities, which so strikingly illustrates the present pros- 
perity of our farmers, have been absolutely coeval with the 
establishment of the protective policy, which has given them 
a home market; made consumers out of competitors; saved 
cost of transportation of articles to be bought or sold; made 
manufactured products, attainable by exchange of farm 
products, cheap by domestic competition, and desirable, be- 
cause fabricated as can only be done at home, in exact con- 
formity to their wants. Soil and climate were just as 
favorable sixty years ago, when the farmers of this country 
were deplorably wanting in all the comforts and luxuries of 
life except those produced on their own farms. I myself 
remember seeing the wagon-trains of emigrant New Eng- 
land farmers on their weary march to Ohio because there 



480 THE farmers' question. 

was no prospect of anything but bare subsistence at home. 
I remember the time when scarcely a farmer's house in the 
country was painted, when hardly one farmer in ten had a 
greatcoat and none wore underclothing, when even the 
implements of husbandry were in so little demand or so 
hardly obtainable that the largest manufacturer of agri- 
cultural implements in the country made but ten dozen 
shovels a week, while his successor now makes two thousand 
dozen in the same time. This was the time when General 
Jackson uttered his famous exclamation, ''Where has the 
American farmer a market for his produce ? " The older 
men of our community observe that no change in our social 
aspect is so remarkable as the improved condition of our 
agricultural population and their increased consumption of 
manufactured commodities, — a social change sufficiently 
illustrated by the simple fact that our city and country pop- 
ulations are now absolutely undistinguishable by their dress. 
This change I assert, without attempting at present to fully 
verify my assertion, commenced with the passage of the 
tariff of 1816, which gave the first impulse to our manu- 
facturers, and was first conspicuously manifest after the 
tariff of 1824, and its complement, the tariff of 1828,* — 
the highest we have ever had, with rates of duty averaging 
forty-one per cent, upon imports subject to duty; while the 
prosperity of our agricultural population has continued to 
fall and rise with the ebb and flow of the protective policy, 
culminating in the long protective period of the last twenty 
years. If the fact of our agricultural prosperity is demon- 
strated, as it seems to be beyond all question by the admis- 
sions I have cited, what becomes of the assertion that Amer- 
ican farmers "pay more and get less than any land-tillers 
in the world " ? This position failing, the keystone falls 

* Mr. Clay says of this period, "If the term of seven years were to be selected 
of the greatest prosperity this people have enjoyed since the establishment of 
their Constitution, it would be exactly that period of seven years which immedi- 
ately followed the passage of the tariff of 1824." 



THE farmers' question. 481 

from the arch so skillfully builded, and the whole structure 
of argument topples to the ground. I might here rest my 
case if experience had not proved the value of accumulated 
argument, and if it were not instructive to consider other 
fallacies in this appeal no less unsound and delusive. 

THE MAXIM, ''BUY CHEAP AND SELL DEAR," CONSIDERED. 

A fallacious argument to be successfully met must be 
encountered in its very premises, and free trade is delusive, 
because the pure assumptions upon which it rests are incau- 
tiously admitted. Such is the assumption that to "buy 
cheap and sell dear " is the sole criterion of the best eco- 
nomical policy, private and national. I maintain that, of 
all classes, this rule is most inapphcable to farmers, and 
especially to those of this country. This doctrine considers 
men only as purchasers and venders. It is the rule of the 
mere trader, or rather huckster, who occupies himself solely 
with the net present profit and loss result in his cash 
account. It is a rule only for to-day and has no notion of a 
to-morrow. The farmer is not a mere purchaser and vender; 
he is eminently a producer; although he properly seeks to 
make good bargains in the exchange of what he already has, 
it is infinitely more important for him to put himself in the 
way of producing more. Every farm is a little State of 
itself, and has or should have its own national policy, as it 
were, looking more to the future than the present. To the 
husbandman the principal object is the improvement of his 
farm, for it is weU:known that nearly all the accumulations 
of our farmers are represented by their improved land. 
Ignoring the temporary policy of the trader, he clears 
forests and grubs up swamps to increase his permanent 
power of production. To have only in view bupng cheap 
and selling dear would be for him to skin his land, to part 
with his seed-corn, to sell his hay instead of feeding it to 
stock, to sap the soil each year of its elements of fertility 
21 



482 THE farmers' question. 

without restoring them, to make butter of oleomargarine 
and sell it as '' gilt-edged," to buy Brummagen axes, shovels, 
and hoes, to wear British shoddy-cloth instead of the sound 
product of his own flocks worked up in his responsible 
neighbor's mill, — in short, to live for to-day without 
thought of to-morrow, and to be the grasshopper rather 
than the ant of the fable. This is not the sentiment of 
American farmers. The most stable, long-al)iding, and 
patient of all classes, more than any others, in this country 
at least, they look to their interests in the long run. They, 
as well as our mechanics, for most farmers are both, will 
have the best attainable implements and tools in spite of 
their first cost; and what prices will they not pay for the 
best breeding stock, patiently biding their time for the 
improvement of their flocks and herds? Looking to their 
interests ''in the long run," they rejoice to see manufac- 
tories spring up around them, bringing them consumers, 
helping to pay taxes and support schools, giving employ- 
ment to their children, increasing the value of their land, 
and making them partakers of a common .prosperity. They 
take still a broader view. The absolute owners of the 
country, as Vice-President Wheeler has recently well said, 
and, aside from the comparatively small area of the cities 
and villages, the proprietors of all the soil, they have a 
stake in the national welfare, such as no other classes have, 
and in fact concern themselves with its interests as no 
others do. They are our bulwarks against European com- 
munism, and we may hope against other no less dangerous 
forms of foreign propagandism. They constitute the ruling 
political majorities, at least in the North and West. Con- 
servative, yet wisely progressive, controlling the political 
power, as they have done by their votes for the last twenty 
years, including the great crisis in our history, it is they 
who have eliminated from our institutions the last vestige of 
feudalism ; and it is they who have incorporated into our legis- 



THE farmers' question. 483 

lation the principle of the new and benign gospel of political 
economy which considers ''the laws of the production and 
distribution of wealth," not alone, but in their relations to 
human welfare. The narrow and selfish maxim of mere 
trade has no place in a political economy like this. How 
inappropriately, then, is it applied to those who make it 
subordinate in their private transactions, and sink it wholly 
in their determination of public duty, because, as "the 
absolute owners of the country," they are compelled to 
seek in the development of the nation and the welfare of 
all its people the first source of their own prosperity? 



It should be observed, moreover, that there are obvious 
reasons why farmers disregard the "Golden Rule of trade" 
in their private transactions. To the trader it is equally 
important that he should buy cheap and sell dear. To the 
farmer it is comparatively of little importance for him to 
buy general commodities or manufactured products cheap, 
provided he gets good prices for his farm products. Obtain- 
ing the chief necessaries for subsistence for his land, it is 
his happy lot to be able to retrench at will, without much 
inconvenience, his consumption of purchased commodities. 
He therefore looks mainly to the prices of his own products. 
Their high prices to him are something more than trading 
results, — they are a source of personal pride, an indication 
of the productiveness of his farm, the assurance of future 
prosperity; hence the good times in which farmers rejoice 
are not those when goods are cheap but when farm products 
are high. All that the.Cobden Club pretends seriously to 
offer him in its system is cheap goods. In vain is the net 
set in sight of any bird. This is a poor lure to one who can 
see with half an eye that in those cheap foreign goods is 
involved the loss of what he values above all other things, 
— a home market for the products of his farm. 



484 THE farmers' question. 

OUR FARMERS SEEK AND RECEIVE DIRECT PROTECTION. 

I will but glance at the next proposition in the Cobden 
Club appeal, to follow them in their order, whicli is that 
farmers have no direct interest in our protective policy. 
The statement is thus broadly made: ''The Western farmer 
himself neither receives nor seeks legislative 'protection.' 
He requires no State subvention." So far from this being 
true, farmers are protected by what would be regarded in 
Europe as high duties upon all the important agricultural 
products, as by a duty of from ten to twenty cents per 
bushel on all cereals, twenty per cent, on animals, etc., the 
duties being demanded, it is true, to resist not European 
but Canadian competition. The vigor with which our farmers 
resist a reciprocity treaty with Canada, which would involve 
a partial surrender of these duties, shows how stubbornly 
they insist upon retaining such protection as they have. 
Upon all agricultural products in which the foreign compe- 
tition is more formidable, our protective duties to agricul- 
ture attain the highest range, as in rice, sugar, and wool, 
the protective duty on the latter being higher than upon any 
manufactured product except those of silk. I need not 
show how essential this protective duty, although amounting 
to from three to four millions annually, is to sustain, against 
the competition of the half civilized growers of the South- 
ern Hemisphere, the most cherished and wide-spread of all 
our agricultural industries, our sheep husbandry, because 
the pioneer of agriculture, the most available means of re- 
storing the land and the chief source of cheap animal food. 
The facts that the wool duties were imposed at the demand 
of the West, and that the many attempts made in the last 
ten years have met their chief resistance from the West, are 
sufficient to refute the assertion that "the Western farmer 
neither receives nor seeks legislation." It is amusing to 
hear the Cobden Club teachers proclaim to the Western 
farmer the enormity of the duties he is compelled to pay on 



QUESTION. 485 



woolen and worsted goods, asserted to be sixty -six per cent, 
on the average, when more than half of this duty is the 
mere equivalent of the duty upon wool imposed for the pro- 
tection and at the demand of the - Western farmer himself. 

This theory, as old as the first attack upon our 

tariff system, has been so often and so completely refuted 
that nothing but a contempt for American intelligence 
could have permitted it to be revived at this day. It is a 
theory so preposterous that it can hardly be answered seri- 
ously and is best met by that method of logic which con- 
sists in reducing a proposition to an absurdity. Our last 
British teacher in political economy seems to imagine that 
the " mare's nest " of monstrous figures which he has found 
is a new discovery in the unexplored field of American 
finances. Years ago American theorists of the school of 
Calhoun, T\^alker, and Wells, saw in the clouds of their own 
fancy similar monsters; but happily the people to whom 
they were pointed out failed to see their huge proportions 
or to respond with Polonius, '' Yery like a whale! " Years 
ago our wiser economists, such as Clay, Phillips, and Elder, 
showed that those monsters were but clouds and phantasms. 
The monstrosity of the tax upon consumers was the staple 
of the stump-speeches against the tariff of 1842. Mr. 
Clay, in his Raleigh speech of 1844, tells us how the "West- 
ern farmers pricked the bubble theory with the needle fact 
in his day. '' My friend," cried a Western demagogue from 
the stump to a farmer in his audience, "do you know that 
these tariff monopolists make you pay six cents a yard (the 
amount of the duty) more than you ought to pay for the 
shirt on your back?" ''I suppose it must be so," replies 
the farmer, " since you say it, but I can't quite understand 
how it can be, since I gave for it only five cents and a half 
a yard! " 

Thirty years ago, Judge 'Phillips, replying to Secretary 
Walker, showed that if the duty were added to the price of 



486 THE farmers' question. 

all articles imported and produced in the country the then 
existing duty upon corn and other "cereals would inflict a tax 
upon our people, or a dead loss by producing these cereals 
ourselves instead of importing them from abroad, of $74,- 
000,000. An average duty of twenty-one per cent, upon 
$470,000,000, the then estimated amount of our manufac- 
tures he shows upon the same theory, would inflict a loss of 
$66,000,000 through producing our own manufactures in- 
stead of importing them. He presents these figures to show 
by their enormity the absurdity of the free-trade theory 
upon its very face. Our British teacher swells his figures of 
loss, even to the farmers alone, to the appalling sum of 
$400,000,000, and does not seem to suspect that the very 
enormity of his statement makes it ridiculous. 

At a later period Dr. Elder, replying to Mr. "Wells, — a 
believer in the reflected effect of duties upon the prices of 
domestic commodities, — shows that in the year 1867-1868, 
the average duty on foreign goods competing with American 
was a small fraction less than forty-eight per cent., while the 
value of American products in that year was $3,487,000,- 
000. On this sum, he says, according to the theory of free 
trade, " A forty-eight per cent, increase of cost to consum- 
ers must have fallen, and therefore the duties charged upon 
the foreign import surcharged the prices of their domestic 
rivals the total sum of $1,473,760,000, or nine and one-half 
times the amount of the duties secured to the Treasury by 
the system of raising revenue at the custom house! " These 
figures are scarcely larger than those given by our British 
teacher. There is the important difference in the objects of 
the statements made by the two economists. By one they 
are made seriously and by the other ironically, as if the bare 
statement sufficiently exposed its absurdity. We may half 
suspect that Dr. Elder is responsible for our British friend's 
delusion. It is not the first time that an American extrav- 
aganza has been taken by credulous foreigners for sober fact. 



THE farmers' question. 



487 



The theory is reduced to its utmost verge of absurdity by 
a later statement of Judge Kelley in his speech on the Wood 
tariff bill in May, 1878, who gives the following table of the 
quantities of certain specified agricultural products raised in 
the country, the quantities exported and retained for home 
consumption, the rates of duty on each and the consequent 
tax imposed upon the people at large for the benefit of the 
farmers, if it be true that duties are added to the prices not 
only of imported articles but those of domestic production. 



Products. 


Number of 
bushels 
raised 
in 1877. 


Number of 

bushels 

exported. 


Balance 

for home 

consumption. 


Duty 

per 

bushel. 


Amount of tax 
imposed on the 
consumers in 
the United 
States, calcu- 
lated in accord- 
ance with the 
free trade 
dogma that the 
duty is added 
to the price. 


Wheat, . . . 
Barley, . . . 
Potatoes, . . 
Corn, .... 
Oats, .... 

Rye, 


360,000,000 

35,600,000 

146,000,000 

1,340,000,000 

405,000,000 

22,100,000 


57,043,936 

1,186,129 

529,650 

73,100,518 
2,854,128 
2,227,000 


302,956,064 
34,413,871 

145,470,350 
1,266,899,482 

409,145,872 
19,873,000 


$0.20 
.15 
.15 
.10 
.10 
.10 


$60,591,212.80 

5,162,080.65 

21,820,552.50 

125,689,948.20 

40,214,587.20 

1,987,300.00 


Total, . . . 


2,308,700,000 


136,941,361 


2,171,758,639 




$256,465,681.35 



Applying a similar calculation to other agricultural pro- 
ductions, — hay, vegetables, animals, wool, etc., — the theory 
would make the tax imposed for the benefit of farmers not 
less than five hundred million dollars. This is precisely as 
true, because established by the same reasoning, as that four 
hundred million dollars are " wrung from " the farmer " to 
support unprofitable manufactures in the Eastern States." 



488 THE farmers' question. 

THE FOREIGNER PAYS THE DUTY. 

If it were necessary to seriously combat the position that 
a duty upon such articles as are produced in the country is 
a tax upon the consumer to the extent of the duty, I might 
show that the duty is wholly, or in a great part, paid by the 
foreign importer, by a diminution of his profits, or what is 
more generally the case, a reduction of wages and the cost 
of raw materials, which enter into his products. The very 
earnestness with which foreigners oppose our duties shows 
that the duties are obnoxious, because they are heavy draw- 
backs upon their own profits. British manufacturers, in 
addressing us, tell us that our people pay all the duty. In 
consulting among themselves, in their chambers of com- 
merce at Bradford and Manchester, they invariably complain 
of the tax which they have to pay for the admission of 
their goods into foreign countries. The orators in Canada, 
clamoring for a reciprocity treaty, constantly declare that 
Canadians have to pay the whole of the duty on the coal, 
barley, and wool imported into the States; and our experi- 
ence under the Reciprocity Treaty, when for a time these 
articles were free, proved conclusively that the remission of 
the duty which our Government lost inured to the benefit, 
not of the American consumer, but the foreign producer, — 
the prices in our markets being no dearer with the duty 
than when these articles were free. 

GOODS CHEAPENED BY PROTECTION. 

If it were material for the point I have in view to show 
the intrinsic or practical cheapness of manufactured com- 
modities to our farmers, in consequence of our home manu- 
factures under the protective system, I might show that 
the invariable effect of the introduction, through protective 
duties, of a domestic fabric, has been the immediate reduc- 
tion of the price of the foreign competing article, and a 
continually increasing reduction, through domestic competi- 



THE farmers' question. 489 

tion, in fact bringing them to the level of cost required by 
wages of labor and profits of capital in all the branches of 
business in the country. Cottons, woolens, in their infinite 
variety, hardware, steel, cast and Bessemer, glass, nails, 
screws, and machinery are palpable proofs of this proposi- 
tion. Every farmer past middle age can recall from his 
own experience the multitudinous articles which have been 
cheapened and improved by our protected manufactures. 

FOREIGN GOODS CHEAP ONLY WHEN NOT IN DEMAND. 

If it were necessary to dwell upon the question of cheap- 
ness, I might show that the cheapness of foreign commodi- 
ties ceases the moment there is a demand for them, — as 
English rails rose from fifty up to eighty dollars a ton when 
the tariff of 1846 closed our own furnaces and rolling mills, 
and as, in the last year, English combing wools, in England, 
rose from ten pence to eighteen pence per pound when the 
exceptional demand of fifteen million pounds of these wools 
was made upon England from this country. A temporary 
cheapness, to be followed by excessive dearness, or a tinter- 
board movement of prices, is no benefit to consumers. It 
is too obvious to need argument that our consumers wiH 
best secure equable or gradually falling prices by a system 
which, while not prohibiting importation, preserves domestic 
competition in full activity. 

HIGH WAGES BENEFIT FAEMERS. 

I do not commend our national protective system to 
American farmers because it produces manufactured goods 
as cheaply as they can be made in Europe. As I have said 
before, the nominal -cheapness of these commodities is, to 
the farmer especially, of little importance, in comparison 
with other considerations. I freely admit that manufactured 
commodities cannot be produced in this country as cheaply 
as in Europe, for the simple reason that, while wages of 
21* 



490 THE farmers' question. 

labor constitute from one-fourtli to three-fourths the cost of 
nearly all manufactures, we pay, and from the nature of our 
institutions must continue to pay, for a day's labor from two 
to four times as much as is paid in Europe. But let the 
farmers remember that it is these higher wages, although 
making manufactured products nominahy dearer, which 
create for them the greater part of the consumers of farm 
products, — the mechanics, artisans, and manufacturing ope- 
ratives of the country, with their dependents, diverting 
them also from labor on the land, and converting them from 
competitors into consumers. It is the higher wages which 
enable these consumers to pay liberal prices for the agricul- 
tural products which constitute at least three-fifths of their 
expenditure. It is these higher wages which enable the 
farmer, in his turn, through the better prices received for 
his products, to obtain the commodities manufactured by 
these consumers at little cost of transportation, and to obtain 
them more abundantly and practically more cheaply than 
they could possibly be obtained from distant countries; for 
to the farmer those commodities are the cheapest the greatest 
quantity of which are procurable for the product of a given 
number of days' labor on his land. The intelligent farmer 
can readily see that he, of all men, would be least benefited 
by the cheap foreign manufactured products with which 
free trade would tempt him ; he must see that they mean 
nothing else than one of two things, — a total abandonment 
of manufactures in this country — the real object of the 
Cobden Club — and a total loss of the chief part of his cus- 
tomers; or a lowering to European rates, — a reduction, of 
at least one half, of all the wages of labor in our mechanical 
and manufacturing industries, with a diminution to the same 
extent of the ability of the workers in these industries, to 
purchase the products of the farm. Tliree-fifths, at least, 
of the higher wages of manufacturing labor, created and 
sustained by our protective system, go into the pockets of 



THE farmers' question. 491 

the farmers; and every ton of iron and every yard of cloth 
produced in this country represents to that extent the pro- 
ducts of American farms. 

HOW GOODS FALL AND LAND EISES. 

Let me conclude this branch of my subject — the illusion 
of cheap foreign commodities — by recalling a law in social 
science, first announced and demonstrated by the most illus- 
trious economist of the present century, the late Mr. Carey, 
whose authority, I trust, will be sufficient for its' acceptance 
without the illustrations which might be given. It is this: 
In countries in which society advances with perfect freedom 
for development, as in those defended by protective la,ws 
from foreign interference, it is the fixed law that the cost of 
manufactured commodities tends constantly to decrease, and 
the value of land, and the costs of the products of the land, 
to increase. Thus, under the protective system, the farmers 
of this country, not through the selfish methods of the 
trader, but consistently with the welfare of the whole com- 
munity, may attain the ultimatum of free trade, in buying 
commodities cheap and selling land and land-products dear. 

WESTERN MANUFACTUEING INTEREST, 

I need not tell "Western men how enormously manufac- 
tures of evei*y form pursued at the East are developed, and 
with what wonderful vigor and rapidity they are advancing, 
in their States. We, of the East, know it well enough, and 
I might say, to our cost, if Western competition had not 
compelled us, in Mr. Webster's phrase, to find '^ room higher 
up." Ohio is declared,to be the third manufacturing State in 
the Union. Chicago threatens to rival Philadelphia. With- 
out specifying other industries, the West makes substantially 
all her agricultural machinery, and, with the exception of 
some fabrics of cotton and silk, clothes what would be equal 
to her whole agricultural population. I have personally col- 



492 



THE farmers' question. 



lected from the official returns of the census, now in pro- 
gress, the following comparative tables: — 



NUMBER OF WOOLEN MILLS IN EASTERN STATES 




Maine, ..... 


64 


New Hampshire, 




96 


Vermont, 




52 


Massachusetts, 




. 329 


Ehode Island, 




94 


Connecticut, 




159 




794 


NUMBER OP WOOLEN MILLS IN WESTERN STATES 




Ohio, . . . . . . 


208 


Indiana, 




107 


Illinois, 




78 


Missouri, 




71 


Wisconsin, 




61 


Iowa, . 




65 


Minnesota, 




11 


Colorado, 




1 


Utah, 




10 


Washington Territory, 




1 


Michigan, 




43 


Ca,lifornia, 


• e • 1 


12 



668 

By these tables it wiU be seen how rapidly the West is 
trenching upon the East. I do not pretend that the Western 
mills equal in capacity those of New England, nor that they 
produce certain classes of fabrics, such as dress goods and 
carpets, which can be more advantageously made in larger 
establishments. But each one of these mills is the nucleus 
for a broader extension. Many a Western two set mill of ten 
years ago has already quadrupled its capacity. These small 



THE farmers' question. 493 

mills of the West are what the germs of most of the large 
factories of the East were forty or fifty years ago, while the 
greater part of the Western mills enumerated have grown 
Tip within only thirteen years under the fostering influence 
of the tariff of 1867. It has been observed that the woolen 
mill is everywhere the pioneer of other manufactures. The 
erection of a woolen mill of one or two sets in a new State, 
which seems to people of the older States a trifling affair, is 
in fact an epoch, — the dawn of manufactures, — which all 
experience tells us will expand into a widely-diversified in- 
dustry, with its sure accompaniment, a prosperous and im- 
proving agriculture. The table above given does not merely 
show what the West has now, but what she is sure to have 
within the lifetime of even middle-aged men, — an industry 
capable in itself of supplying all the necessary commodities, 
and most of the luxuries, required by its people. 

ILLUSTRATION OP HOME MARKET. 

We do not have to go far for an illustration of the advan- 
tages of a home market. All the Western States above 
enumerated are eminently wool-producing States. Take 
Ohio, with its two hundred and eight woolen mills, distri. 
buted in all parts of the State, and its four million sheep. 
The raw material, wool, composes a little more than one half 
the cost of the cloth made in these mills. The whole of this 
cost is paid to the farmer by the mill almost at his door. 
One-quarter, at least, of the remaining cost of the cloth con- 
sists of the wages of labor, and of this, as I have before 
said, the farmer gets at least three-fifths. Of the last remain- 
ing quarter, comprising some cost of raw material, profits, 
etc., the greater part is usually expended for improvements, 
making a still further expenditure for labor and the con- 
sumption of farm products. Much the largest part of the 
cost goes to the farmer. He in his turn wants cloth for him- 
self and his family. He gets it by mere exchange at the low- 



494 THE farmers' question. 

est price at wMcli it can be made with a fair profit, because 
of the competition of the other two hundred and eight mills, 
and through the same competition obtains the highest market- 
price for his wool. 

I have before me an advertisement of one of these Ohio 
mills with this notice: ''The highest market-price paid for 
wool in goods. All goods warranted free from shoddy and 
cotton." Here is an exchange made to the utmost possible 
advantage of both sides. There is no loss in transportation, 
no loss through middle-men, no possible loss by fraud on 
either side; for both purchasers know each other, and are 
permanently accountable one to the other. All the devices of 
trade known since the time of the Phoenicians could not con- 
trive to make the farmer's cloth so cheap, or his wool so dear, 
as by the simple exchange I have described. This is what I 
mean by a home market, and this is what the Cobden Club 
advises the Ohio farmers to abandon. Although all ex- 
changes in the home market are not so simple as the above, 
they all involve the same great principle, which is the first 
aim of a protective policy. Protection would bring, through 
a home market, the producer and consumer as nearly as pos- 
sible together, saving the cost of transportation and losses 
through middle-men. Free trade, on the contrary, aims to 
separate the producer and consumer as widely as possible, 
and to saddle both with the cost of transportation and com- 
missions for the benefit of the trader and non-producer. 

WITH A HOME MAEKET ALL THE PEODUCTS OF THE FAEM 
SALABLE. 

It may be said that wool, — and the same applies to wheat, 
— being an easy transportable article, and of high value, the 
cost of transportation being added to the price, it will realize 
as much in the distant as the home market. But wool and 
wheat are only two of the products of the farm. It is the 
first principle in agriculture that a mixed husbandry is the 



THE farmers' question. 495 

most profitable. There is not only more profit, but there 
never ca^n be ruin by the total loss of the farm crop. The 
most profitable crops are those which are not transportable, 
at least to distant countries, such as fruits, garden vegetables, 
etc. When the farmer can exchange the whole of the pro- 
ducts which his land can be made to yield, at rates corres- 
ponding with the general price of labor, his farm will be 
worth four times as much as it would be when only wheat 
and other cereals can be sold. This he can do when the pro- 
tective policy plants the village of mechanics, artisans, and 
factory operatives in his neighborhood. Hence it is that 
land in the vicinity of a manufacturing population is worth, 
for agricultural purposes alone, from $100 to $200 an acre; 
while without these advantages, it is rarely worth, in this 
country, $40 an acre. 

The State of Massachusetts — perhaps the best t3rpe of a 
manufacturing State — well illustrates how manufactures may 
be conducive to a prosperous agriculture, even upon poor 
granitic soils. In this State, according to the . State census 
of 1875, the average value of each of the 44,549 farms is 
$4,100. In the leading manufacturing county, — Middlesex, 
— the average value of the 116,134^ acres of cultivated land 
outside the cities, is $98.05. The average value of 3,988f 
acres of market gardens is $283 per acre. The total value 
of the agricultural products of Massachusetts, in round 
numbers, is forty millions of dollars. Of this amount the 
cereals and the wool, the easily transportable products, yield 
only $1,724,346; over thirty-eight millions of miscellaneous 
farm products not so transportable being consumed at home, 
principally by the manufacturing population. The latter 
fact shows how a manufacturing State ceases to be a rival of 
the West in the production of cereals, which at present can 
be more advantageously grown there, while each one of its 
1,651,912 people consumes yearly at least one barrel of 
Western flour. 



496 THE farmers' question. 

THE FOREIGN MARKET UNRELIABLE AND INADEQUATE. 

The Cobden Club essay says, "Tbe very essence of the 
American farmers' prosperity depends upon their having 
large and increasing outlets abroad for the large and increas- 
ing amount of their produce." The writer of the essay, 
unsuspectingly, in another connection, gives a conclusive 
reason why it is not for the farmer's interest to seek for his 
market abroad. He says, "The more freight the Western 
farmer has to pay to get his produce delivered in European 
markets, the smaller the net residue that comes to him, for 
the European buyer's prices include freight." It is thus 
admitted that the farmer who sells his wheat in England has 
first to pay the cost of getting it there. He then and there 
finds grain competing with his own for sale, which was 
raised around the Baltic or Black Sea by cultivators who 
have but a tithe of his burdens to carry, whose product 
reaches market at a less cost of transportation, and which, 
accordingly, in average seasons, can be sold at a lower price 
than his can be afforded at. The exceptional European 
demand for American wheat for the last three or four years, 
I need not say, is due purely to the failure of European har- 
vests within that period. There have been four years of 
failing, harvests in England, and in the last year an unprece- 
dented falling off of the crop in France, — ordinarily an 
enormous producer of wheat. It cannot be doubted that a 
return of good harvests in the grain countries of Europe 
Would arrest, or greatly diminish, American importations. 
Even the Cobden Club essay admits that they would be 
stopped by "average harvests in Europe." It is true that 
last year the exportation of our wheat reached the extraordi- 
nary proportion of 24.76 per cent, of our total production. 
But can the wheat-grower, who must provide for his crop a 
year before he sells, rely upon a permanent demand like this ? 
Besides, constant fluctuations in price and constant distur- 
bances in the home market are the penalties which our wheat- 



THE farmers' question. . 497 

growers must pay for producing for foreign countries. I 
might fill my pages with figures illustrating these fluctu- 
ations, bat they would only confuse the reader. I can make 
my point clearer by quoting the statements of our most 
eminent agricultural statistician, Mr. Dodge, recently made in 
a government report. Speaking of our wheat exportation, he 
says: — 

<' The proportion of exportation is so large and the range 
of its fluctuation so great, that serious disturbance in the 
market often results. It not unfrequently occurs that a 
moderate yield is accompanied by low prices, and a large 
crop is marketed at high rates. There is no doubt that the 
wheat-farmer is at the mercy of the foreign demand. If 
British fields are blighted, there is rejoicing on our prairies 
over remunerative harvests. If the garners of continental 
Europe are full, and England's wants at a minimum, there 
is dissatisfaction at the West, liable to be vented on the cur- 
rency, the tariff, or the railroads. . . . While subject to 
greater fluctuations than other crops, from the vicissitudes 
of the seasons and depredations of insects, the quantity 
required annually for exportation is still more variable than 
the amount of the crop; the heaviest foreign demand may 
occur in a season of low production, and the lightest in a 
year of abundance, increasing the fluctuation. . . . The 
wheat-grower is at one time elated with remunerative prices, 
and at another, depressed by rates which fail to pay the cost 
of production." 

Such are the blessings of producing for a foreign market! 
Is it true, then, that in such a market, as free-trade essayists 
assert, with all its caprices, fluctuations, and uncertainties, is 
to be found 'Hhe very essence of the American farmer's 
prosperity ? " 

Happily our own home market, imperfectly developed as 
it still is at the West, yet remains as the main reliance of the 
Western grain-farmer. Of the peculiarly national product 



498 THE farmers' question. 

of our semi-tropical summer climate, our Indian-corn crop, 
amounting to 1,342,558,000 bushels, only 87,192,110 bushels 
or 6.49 per cent, are exported, 93.51 per cent, being consumed 
at home. Every sensible farmer must admit that an increased 
exportation of corn is by no means desirable, as there is 
usually more- profit in the sale of meat, wool, and other 
products of corn. He must admit, too, that the loss of soil 
fertihty and the cost of transportation, often far greater than 
the original value of the grain, will ultimately bring both him 
and his farm to poverty, while the corn being consumed at 
home, the soil elements are preserved, and the meat and wool, 
into which it is converted, have a value which bears trans- 
portation. Of our total grain crop, even with the unprece- 
dented exportation of nearly 250,000,000* bushels of wheat, 
we still retain and use eight-ninths of the total volume of 
production. What proof more conclusive than these simple 
facts can the farmer demand of the immeasurable superiority 
of the home market over that promised, but by no means 
assured, by the advocates of '' outlets abroad for American 
produce ? " 

HOW TO RAISE PEICES OF FAEM EXPORTS. 

I would by no means deny broadly the value of a foreign 
market for our farmers' surplus products; but I would have 
the exports, instead of being simply raw products of costly 
transportation, those which embody to the utmost possible 
degree American labor, — in short, the manufactured products 
of the farm, such as cheese, butter, flour, maizena, bacon, or 
other ''hog products;" and I would have those articles 
exported at prices fixed by the competition of an active home 
market, which can only exist where all industry is astir. I 
have before me a market report of a month or two ago, in 
one of our city papers, which shows exactly how foreign 

* The figures under this head are derived from Mr. Dodge, 



QUESTION. 499 



prices are governed by the activity of our own industries. 
It is as follows: — 

''The market for hog products continues excited, with a 
demand ahead of the supply, and prices materially advanced 
yesterday both at home and abroad. Liverpool quotations, 
following the lead of Chicago, have been marked up nearly 
every day for the past week. . . . Early in the season , 
dealers on the other side continued to hold off for lower 
prices until the English markets were very bare of supplies. 
They did not count upon the enormous and steadily-increasing 
consumption of this country, brought about by the business 
revival and generally-improved condition of our industries. 
But while European buyers were holding back, prices have 
continued to advance here, until, compelled by their necessi- 
ties, they are now coming in for supplies, and readily pay 
prices 25 per cent, higher than they could have bought for 
here two or three months ago." 

This plain business statement well illustrates how a profit- 
able export is best advanced by the profitable employment of 
our domestic industries. 

EXPORTS NOT DEPENDENT UPON IMPORTS. 

The Cobden Club essayist maintains that if our farmers do 
not take the manufactures of foreigners they will not buy his 
produce. He says, " How are the farmers to export if the 
toanufacturers will not allow imports?" The . proposition 
that if a nation will not import it cannot export is another 
of the pure assumptions of free trade which is utterly at 
variance with established facts. Some of the facts contra- 
dicting this assumption are well stated by the able editor * 
of a leading protective journal, in a reply to Mr. Mongredien's 
book on Free Trade and English Commerce. 

"The United States is a large purchaser of Brazilian 
coffee and Chinese tea, but neither Brazil nor China buys 

*Mr. J. ]\r. Swank of Philadelphia. 



500 THE farmers' question. 

from us one-half tlie value of our purchases from it. We 
buy from Cuba large quantities of sugar, and the balance of 
trade between the two countries is many millions every year 
in favor of Cuba. Great Britain herself has bought bread- 
stuffs and provisions from this country in the last four years 
in unusually large quantities, and during the first three years 
of this period our purchases of her products were much less 
than they had previously been. She fell greatly in our debt 
and had to pay us hundreds of millions in gold or in our 
bonds which she returned to us. ' If you want to export 
much you must import much,' says Mr. Mongredien. This 
is not true to-day, as we have shown, and it never was true 
in a general sense. One leading function of gold and silver 
is to equalize the balances of trade which are constantly 
requiring the attention of commercial nations. England 
buys our wheat because she must have it or starve, and we 
buy the cofEee of Brazil, the tea of China, and the sugar of 
Cuba because these articles are necessary to our comfort. 
England does not hesitate to buy our wheat because we have 
until recently refused to buy her iron, nor do we stop to 
dicker with Brazil and China and Cuba concerning the quan- 
tity of our products they shall buy from us." 

I might add that in 1878 France took our exports to the 
value of over 487 million francs (according to French statis- 
tics), while we imported in that year a value of but a little 
over 207 million francs. For a term of ten years previously 
our imports exceeded our exports fifty-three million francs 
annually, thus proving that exports had no relation to 
imports. 

This assumption of free trade is devised to show that pro- 
tective duties check commerce. I barely remark, for this is 
not the place for a full illustration, that it can be demon- 
strated that, so far from commerce being checked by protec- 
tion, the periods of our largest general importations precisely 
correspond with those of our most protective tariffs ; the fact 



THE farmers' question. 501 



being that the prosperity induced by protection increases the 
purchasing power of the people, enabhng them to import, not 
only the raw materials for manufacture, but the peculiar 
commodities of other countries not produced at home.* 

DEPRECIATION OF AMERICAN SKILL. 

Although I have now considered all the arguments of the 
essay under review, directly applicable to the farmers' ques- 
tion, I cannot overlook the imputation upon our national 
capacity, by no means unequivocally made, in the declaration 
that the manufactured products of this country are dearer 
than those abroad on account of the comparative inexpert- 
ness of American manufacturers, who are said to be taken 
from what they "can do well," viz., to dig and to hoe, and 
are, by means of protection, "set to do only what they can 
do badly," viz., to spin and to weave. I have before me the 
pubhshed statement of the highest German authority in the 
textile arts to an American correspondent, in these words: 
" The greatest part of your own invented machinery is supe- 
rior to the EngHsh, German, or French machinery, especially 
your looms for finer work, your looms for cotton goods, cas- 
simeres, carpets, and heavy work." When it is considered 
that perfected machinery is the recognized test of manufac- 
turing excellence, we may regard the British depreciation as 
suflBciently refuted by this impartial ' tribute to American 
skill, and may be permitted to omit the enumeration of the 
hundreds of instances which might be cited of American 
inventions which have contributed to the boasted cheapness 
and excellence of the goods turned out by British mills. 

* The atove article is liisljly commended to the farmers of America by Hon. 
Henry L. Dawes and Hon. George F. Hoar. 



CHAPTER XXXV. 

THE INTEEESTS OF THE FAEMER INDEFI- 
NITELY POSTPONED. 

By Pkof. John Bascom, 
President of Wisconsin State University. 



FAEMEES may well claim, and claim with more empha- 
sis than any other class, that protective duties should 
be rapidly and finally removed. Farmers are oneJialf the 
community; the direct benefits of protection lie almost 
wholly with the other half. 

It follows, then, that the burdens of protection fall chiefly 
on farmers. 

The one grand promise of the theory of protection, that 
with which it fills the mouths of its friends, and assails the 
ears of its enemies, that on which all its justness as a theory 
turns is, that if the burdens of protection are quietly borne 
for a limited period, they will, at its expiration, be with- 
drawn, and will be replaced by free trade, diversified indus- 
try, and general prosperity. 

The success of protection must be found in its fulfillment 
of this promise. I am not disposed to deny that the prom- 
ise may be made in good faith, and, 'under favorable circum- 
stances, if fulfilled in good faith, may be followed, at least 
in part, by the results indicated. 

This portion of the problem it is no longer necessary for 
us to consider. We have accepted the theory; liberal pro- 
tection has been granted for many years to many industries. 

(502) 



INTERESTS OF THE FARMER POSTPOxXED. 503 

We are a great productive people, — hardly any greater. 
Personal energy and natural advantages have wrought 
marvels in our behalf. Capital has accumulated with us in 
large amounts, even when we compare ourselves with the 
nations of the Old World. 

Our material resources are unbounded. Skill has been 
acquired and enterprise called out. The various industries 
sustain each other through the entire circle of production. 
Our home labor has guaranteed to it forever the natural 
protection of a broad ocean. 

Now, having borne protective duties for a long period, 
has not the time come in which that early and ever renewed 
promise should be fulfilled? 

More than one generation has passed away while the hope 
of cheap goods has been deferred; how many are to follow 
in its steps still waiting on these renewed assurances to be 
met somewhere in the future ? 

Is all time to be given to this theory to evolve itself in? 
"We may well insist that the place and date of settlement 
should now be named; that we should no longer be put off 
with the gains of our own labor and the incidents of our 
own civilization as if they were the returns of this special 
theory. It looks as if there were profound justness in the 
objection to protection, that its promises are not to be 
trusted, that it adds reason to reason for indefinite postpone- 
ment, that its resources of excuse and apology are inexhaus- 
tible, that it has never been known to say enough. We 
have to deal with the horseleech's daughters, crying, — 
Give ! give ! 



CHAPTER XXXVI. 

THE GROUND OF PROTECTION CHANGED. 
By Horace "White. 



RAW MATERIALS. 



THE curious disputation wMcli has taken place in the 
Committee of Ways and Means lately, and which is 
not yet ended, discloses one fact v/ith remarkable clearness 
— that the grounds upon which protection is defended and 
supported are no longer what they formerly were, but have 
been radically and wholly changed. In the time when Henry 
Clay was the champion of what he called the " American 
system," and at the earher time when Hamilton favored 
some slight advantages in the tariff for the benefit of home 
manufactures, the reason assigned for such a policy was that 
our manufacturers required a chance to get started. The 
perils attending our "infant industries" were held up as 
the justifying motive for a system of taxation which it was 
admitted, laid more or less burden upon the whole com- 
munity. It was intended that this burden should be suffi- 
cient merely to put the new and untried and struggling 
industries fairly on their legs, and that they should then 
enter into competition with simil'ar industries abroad and 
with other industries at home on equal terms. The moving 
cause for protection was found in the greater skill, expe- 
dience, and capital employed in foreign countries, which it 
was hoped to counteract by a protecting duty for a limited 
period. In the whole course of the tariff debate in Congress 

(504) 



PROTECTION CHANGED — WHITE. * 505 

down to the close of the civil war, it would be difficult to 
find a single suggestion that a protecting duty is a good 
thing in itself, apart from its supposed tendency to natural- 
ize and establish some industry to which the resources of 
the country are so evidently adapted that it might within a 
reasonable time maintain itself without legislative aid. 

Now, however, protection is defended on the ground that 
it is a good thing and a right thing per se. We hear little 
or nothing about infant industries. It is a long time since 
we have seen that designation applied, except in the way of 
derision, to any American trade. The infant industries of 
Henry Clay's time are full-grown if not decrepit. We are 
capable of turning out as many tons of pig iron and of steel 
rails in a year as Great Britain. The period of infancy is 
long past and the period of decay has begun in some quarters 
where this industry was once flourishing and dominant. It 
needs no prophet's vision to see that the supremacy of Penn- 
sylvania in the production of pig iron will very soon pass 
away, and that in order to keep her furnaces in blast she 
will need protection against Tennessee, Kentucky, and Ala- 
bama, more than she ever needed it against England. 

But this is not all the change that has come over the 
spirit of protection. We have not merely dropped the 
argument founded upon infancy, inexperience, and defi- 
ciency of capital, but we have taken up the advanced posi- 
tion that one trade has as good claim to protection as 
another, irrespective of infancy, want of training, or want of 
capital. The producer of iron ore, requiring nothing but 
common labor, which any Italian immigrant will perform at 
a dollar and twenty-five cents per day, must be protected to 
the same degree as the manufacturer of plate glass or the 
producer of the highest class of woven fabrics. The doc- 
trine of equal rights has surmounted and stifled all the old- 
time ideas regarding protection. The tariff must be applied 
new not because a particular industry needs to be set agoing, 
22 



606 ' PROTECTION CHANGED — WHITE. 

but because it is already going and has been going a hun- 
dred years. More than this — the favors of the tariff must 
be awarded to the industry peculiar to one locality or 
region, because it has been given to those of another local- 
ity or region, even though the former (as in the case of cop- 
per) may have given indisputable prgof of its ability to 
defy foreign competition by underselling foreigners in 
foreign markets. 

This is not all the change that has come to pass. The 
early arguments for protection, founded exclusively upon 
the idea of encouraging manufactures, have so far suc- 
cumbed to the doctrine of equal rights that duties are now 
imposed which expressly cripple and discourage manufac- 
tures, and we hear the most appalling threats of vengeance 
to be visited upon this or that political party if the duty on 
raw wool, for instance, is lowered or if the former high 
duty is not speedily reenacted. The anaconda of protection 
has wrapped itself around the woolen and worsted manu- 
facturers till they can scarcely breathe. The producers of 
iron ore actually got an increase of duty last year in a bill 
intended to reduce the general tariff. The Morrison bill 
now pending seeks, among other things, to bring the tariff 
back to its ancient moorings by placing on the free list most 
of the raw materials of manufacturing industry. If the 
champion of the '' American system" were alive he would 
be filled with astonishment that anybody should oppose a 
measure so obviously calculated to promote the interests 
which he desired to build up. He would .not be able to 
understand how the principles which he advocated could 
ever be distorted to the protection of shepherds and spade 
laborers, to the detriment of weavers and puddlers. He 
would probably be classed by the protectionists of the pres- 
ent day with the emissaries of the Cobden Club. 

Let us not blame the iron and coal and copper miners, 
and wool growers, and lumber-men too severely. They diS' 



PROTECTION CHANGED — WHITE. 507 

covered long ago that the tariff is a game of grab. They 
have simply grabbed what they could in competition with 
others. They are under no delusions respecting infant in- 
dustries and American systems, or other mildewed and 
moss-grown catch-words of a past generation. They have 
no higher reverence for the arts of spinning and smelting 
than for those of shearing, and quarrying, and wood-chop- 
ping. They know a dollar when they see it. They find it 
more confortable to have the dollar in their own pockets 
than to muse over it in some other man's. Fine phrases 
regarding the state of general beatitude which results from 
multiplying spindles and forges at their expense are in their 
eyes such frightful rubbish that they would knock the whole 
tariff system into kindhng wood without a moment's hesita- 
tion, if the doctrines of Henry Clay were revived, and put 
in force by taking the duties off the raw materials of manu- 
factures. Their contention is that we have as many spindles 
and forges as can be profitably employed now ; at all events, 
that the reasons for framing a tariff with a view to increas- 
ing the number of them no longer exist, and hence that a 
reduction of the duties on raw materials means simply a 
diversion of their earnings to other people's tills. There is 
a good deal of force in this view. Nevertheless it is impor- 
tant that the bill should be pushed to a general debate in 
Congisss and the country in order that the people may un- 
derstand how great a change has taken place, in the grounds 
upon which protection is defended, during the past twenty 
years. If the country after a full discussion is ready to 
sanction the policy of taxing itself in order to give profita- 
ble employment to common laborers rolling logs in the for- 
ests or digging in ore' beds and coal mines — newly arrived 
perhaps from Italy, Belgium, or Hungary, — so let it be. 
But let us have the discussion at all events. 



CHAPTEK XXXVII. 

PROTECTION DOGMAS.* 
By Hon. Wm. M. Springer. 



I HA YE been somewhat amused, at times, at the arguments 
used by gentlemen on the other side, the advocates of 
the protective system, in order to sustain their theories. 
From these arguments I have heard enunciated as among 
the great principles of protection the following propositions: 
First. That it is the duty of the Government to protect 
American laborers from competition with the "pauper 
labor" of Europe by the imposition of duties on articles 
manufactured abroad which will compensate for the differ- 
ence in the price of labor in this country and Europe. This 
is called <' filling the gap" between the wages of home and 
foreign labor. 

Second. That the amount of duty required in order to 
" fill the gap " must be such as will cause the price of arti- 
cles manufactured at home to be increased to the amount of 
the duty on the imported article of like character. 

Third. That the imposition of import duties does not 
increase the cost of imported articles; that the foreign 
manufacturer pays the duty for the privilege of selling his 
goods in this country. 

Fourth. That the imposition of duties on imported arti- 
cles will have the effect to reduce the cost of like articles 
manufactured in this country. 



♦March 3, 1883, House of Representatives. 

(508) 



PROTECTION DOGMAS — SPRINGER. 509 

All the advocates of the protective system in this House 
have either asserted this doctrine or have acquiesced in the 
assertion of it by others. It is claimed that protection has 
cheapened prices of iron and steel and articles made from 
them; that it has cheapened the price of wool and the man- 
ufactures of wool and cotton and of all of the protected 
articles. From these fundamental "principles" the follow- 
ing deductions may be drawn: 

First. Protection increases prices of articles manufac- 
tured in this country. 

Second. Protection decreases the prices of articles manu- 
factured in this country. 

Third. Protection is absolutely necessary in order to 
"fill the gap" between the wages of home and foreign 
labor. 

Fourth. Protection reduces the prices of home produc- 
tions and thus widens "the gap" which it was intended to 
close. 

Fifth. Protection both closes and widfens "the gap." 

Sixth. Protection protects our home labor against the 
"pauper labor" of Europe. 

Seventh. Protection reduces the prices of home labor 
below the prices paid for "pauper labor" of Europe. 

Mr. Speaker, "these great principles of protection," and 
the logical deductions therefrom, prove the fallacy of the 
protective system and confound and overwhelm its advo- 
cates. No arguments that the advocates of revenue reform 
can produce so completely answer protection fallacies as do 
protection arguments themselves. Place their arguments in 
juxtaposition and their fallacies at once appear. I leave the 
protective system where its advocates have placed it. Its 
fundamental "principles" are like certain chemicals; kept 
separate they are harmless, mixed together they explode. 



\ 



CHAPTEE XXXVIII. 

PEOTECTION EEDUCES PRICES * 

By Professor Robert E. Thompson, M.A., 
Professor of Social Science in the University of Pennsylvania. 



THE object and the efiect of protective duties^ then, is 
to enable the home producer to furnish the manu- 
factured goods more plentifully and cheaper than before the 
duty was imposed. ^' Though it were true/' says Alexander 
Hamilton, "that the immediate and certain effect of regula- 
tions controlHng the competition of foreign with domestic 
fabrics was an increase of price, it is universally true that 
the contrary is the ultimate effect of every successful manu- 
facture. When a domestic manufacture has attained to 
perfection, and has engaged in the prosecution of it a com- 
petent number of persons, it invariably becomes cheaper. 
Being free from the heavy charges which attend the impor- 
tation of foreign commodities, it can be afforded cheaper, 
and accordingly seldom or never fails to be afforded cheaper 
in process of time than was the foreign article for which it is 
the substitute. The internal competition which takes place 
soon does away everything like monopoly, and by degrees 
reduces the price of the article to the minimum of a reason- 
able profit on the capital employed." 

So well ascertained and so necessary is this result as 
regards the profits of manufacture that Professor Thorold 

* Political Economy. Phila., Porter & Coates. 

(510) 



PROTECTION REDUCES PRICES. 511 

Rogers alleges it as a reason against protection '• Unless 
the State were to go so far as to grant a monopoly of pro- 
duction t9 one or a few individuals whom it protects, it 
could not prevent the operation of that economic law which 
reduces profits, other things being equal, to an equality. 
Manufacturers crowd into the protected occupation, and the 
benefit intended to be secured by the poKcy of the govern- 
ment is distributed and annihilated by competition." Mr. 
Rogers does not seem to be aware that this is the very 
"benefit intended to be secured." But we have his word as 
to how that policy does and must work, — above all that it 
involves no monopoly. 

" Competition being always free," says McCuUoch, '-'among 
home producers, the exclusion of any particular species of 
foreign manufactured goods cannot elevate the profits of 
those who produce similar articles at home above the com- 
mon level, and merely attracts as much additional capital to 
that particular business as may be required to furnish an 
adequate supply of goods." 

Neither of these two authors, it will be perceived, con- 
cedes that prices are brought down by protection to the 
foreign rate; but they both show that the foolish clamor as 
to the excessive profits of the protected manufacturer has 
nothing to go upon. Mr. D. A. "Wells flatly contradicts 
his English teachers when he says: "It not unfrequently 
happens that the imposition of a tax in the form of a tariff 
on an imported article is made the occasion for very greatly 
and unnecessarily advancing the price of a corresponding 
domestic product." 

What are the reasons for this final reduction in price? It 
is because the obstacles to cheap production have been over- 
come, and the home producers are competing for the home 
market. These obstacles are manifold. (1.) The lack of 
security deters the manufacturer from putting his capital 
into a large tmdertaking. He has to make great outlays, 



612 PROTECTION REDUCES PRICES. 

great sacrifices even, but he has no security that he will ever 
reap the fruits, unless the home market is secured to him. 
He fears the foreign competition more than that of his com- 
petitors at home, because the latter stand on an equality of 
power and capacity with him, while the former are able and 
ready to make large sacrifices simply to drive him out of the 
market and secure it to themselves. It is not a matter as to 
which we are left in any doubt that artificial fluctuations are 
produced for this purpose. "It has already been shown," 
says Coleridge in 1834, "in evidence which is before all the 
world, that some of our manufacturers have acted upon the 
accursed principle of deliberately mjuring foreign manufac- 
turers, if they can." "Experience," says Blanqui, one of 
the free trade economists of France, " has already taught us 
that a people ought never to dehver over to the chances of 
foreign trade the fate of its manufactures." 

A report presented to the British Parliament in 1864 by 
a commission appointed to investigate the state of industry 
in the mining districts, says: — 

"The laboring classes generally in the manufacturing 
districts of this country, and especially in the iron and coal 
districts, are very little aware of the extent to which they 
are often indebted for being employed at all to the immense 
losses which their employers voluntarily incur in bad times 
in order to destroy foreign competition, and to gain and 
keep possession of foreign markets. Authentic instances 
are well known of employers having, in such tihles, carried 
on their works at a loss amounting in the aggregate to 
£300,000 or £400,000 in the course of three or four years. 

" If the efforts of those who encourage the combinations 
to restrict the amount of labor and to produce strikes were 
to be successful for any length of time, the great accumula- 
tions of capital could no longer be made which enable a few 
of the most wealthy capitalists to overwhelm all foreign 
competition in times of great depression, and thus to clear 



PROTECTION REDUCES PRICES. 513 

the way for the whole trade to step in when prices revive, 
and to carry on a great business before foreign capital can 
again accumulate to such an extent as to be able to establish 
a competition in prices with any chance of success. 

" The great capitals of this country are the great instru- 
ments of warfare against the competing capital of foreign 
countries, and are the most essential instruments now 
remaining by which our manufacturing supremacy can be 
maintained; the other elements — cheap labor, abundance of 
raw materials, means of communication, and skilled labor — 
being rapidly in process of being equalized." 



»^ 



CHAPTER XXXIX. 

DOES PROTECTION RAISE PRICES ? 
By Prof. A. L. Peery. 



SOME protectionists make bold to deny that protective 
tariiff-taxes raise the prices of corresponding domestic 
goods. But this cannot be logically denied; it can not even 
be decently denied, when the Hght of the following proposi- 
tions is cast upon it: 

1. It is the sole design and end of these protective tariff- 
taxes to lift the level of the prices of home-manufactured 
goods above the level that prevails in other countries for cor- 
responding goods; that is the whole theory and purpose of a 
protective tariff. The men who get these taxes actually put 
on, and it is a simple historical truth that no protective tariff- 
tax was ever put on in this country except at the instance 
and under the pressure of men directly interested in such 
rise of price; these men know what they are about, and why 
they are about it; and it is a safe step to take to conclude 
that what such men shrewdly design to bring about is 
actually accomplished by their device. 

2, It has been constantly avowed by protectionists in the 
tariff debates in Congress — and never more loudly than last 
February — that these home-made goods could not he made and 
sold here for the prices at which foreigners sell them. The 
mere proposal to take off the protective tax angers the pro- 
tectionists beyond measure, because, as they themselves say, 
domestic prices would then fall at once to the foreign level. 

(514) 



DOES PROTECTION RAISE PRICES? 515 

Where does the <• protection " come in if the tariff-tax do not 
raise the price of home-made ware ? What is the motive for 
putting such a tax on ? Why did the Onondaga Salt Com- 
pany sell salt in Canada cheaper than in Syracuse itself ? and 
why have the copper companies of Michigan sold copper this 
very year to foreigners for less than any American citizen 
could buy it of them at wholesale ? 

3. Foreign manufacturers are controlling, in spite of pro- 
tective tariff -taxes, our own home market more and more 
year by year. How can they actually pay these import 
duties at our custom-houses, and still sell and undersell in 
our domestic markets, unless the range of our home prices 
of manufactures is artificially and abnormally high ? Our 
tariff-taxes are designed to make and do make prices so high 
in our markets, so' high above their level in other countries, 
that foreigners, after adding the taxes at each custom-house 
to the price of their wares, can still undersell our own man- 
ufacturers at our very doors. Glassware, for example, is 
very highly "protected" by the tariff, and yet the imports 
of glassware in 1882 through our custom-houses, and actually 
paying the duties, were more than ten times greater than the 
exports of glassware, because the artificial prices here invite 
foreigners to come with glass in their hands. We imported 
that year $7,443,211 of glassware. Just so of other wares. 
The increase of the importations in 1882 over 1881 was, in 
silk goods, twenty-five per centum ; in cotton goods, twenty- 
five; in woolen goods thirty-four, and even in iron and steel 
goods, seven per centum. This increase in the imports 
of foreign manufactures, owing to the high prices caused by 
the tariff, has been ^oing on for years. Comparing 1877 
with 1882, the increase in silk goods was from $21,830,000 
to 841,400,000; in cotton goods, from $18,923,000 to 
$40,000,000; in woolen goods, from 825,000,000 to $42,- 
000,000; and in iron and steel goods, from $9,570,000 to 
$50,000,000. 



516 DOES PROTECTION RAISE PRICES? 

4. In October, 1871, occurred the great fire in Chicago. 
In the winter following a bit of legislation took place in 
Congress in consequence, which unmistakably shows the 
sense of that body to be that tariff-taxes raise the price of 
home products, A bill received the signature of President 
Grant, April 5, 1872, which had passed both Houses by large 
majorities, to exempt for one year all huilding material^ except 
lumber, from the operation of tariff-taxes for the henefit of Chi- 
cago alone. "Why did Congress hasten to take off the taxes 
for the benefit of Chicago unless the taxes raised the price 
of building material ? Here is a public confession of the 
most striking kind that the tariff is used to raise prices for 
United States citizens to pay. And why was lumher excepted 
from the operations of that bill of remissions ? Because 
Michigan and Wisconsin lumber lords, who had got the 
tariff -tax on foreign lumber put on on purpose to raise the 
price of domestic lumber, went to Washington in haste to 
get lumber excepted from the materials to be cheapened for 
the relief of burnt Chicago. No proposition in the world can 
be more certain than this, that protective tariff -taxes are put 
on and kept on for the sole sake of raising the prices of cer- 
tain wares, and the taxes do in fact what they are meant for. 

The question every workingman is asking is, whether free 
trade will lower wages or not. That is the practical question 
in this tariff issue. 

Every laboring man who has considered the subject, 
knows this, that a protective tariff raises the prices of nearly 
every thing he has to buy and makes living more costly. 
No intelligent protectionist denies this. But protectionists 
tell the laboring men that the increased cost of hving is 
more than made up by the higher wages protection gives. 

Free-traders deny absolutely that protection raises wages. 
They go further. Free-traders assert positively that protec- 
tion, in the end, lowers wages. 

Fortunately there is no need of arguing the matter. We 



DOES PROTECTION RAISE PRICES 



i? 



51T 



can give the facts. From 1850 to 1860 was a period of low 
tariff — a tariff for revenue only. During that period the 
tariff averaged only about seventeen per cent. From 1860 
to 1880 was a period of high tariff, the highest tariff ever 
known — a tariff for protection. Now, if what protectionists 
tell the laboring men is true, then wages ought to have 
gone down between 1850 and 1860, and they ought to 
have gone up between 1860 and 1880. If what protec- 
tionists say is true the manufactures of the country ought 
to have declined between 1850 and 1860, and increased 
wonderfully between 1860 and 1880. What are the exact 
facts ? From the census reports of the United States for 
1850, 1860, 1870, and 1880 we find that: Between 1850 
and 1860 the wealth and wages of the country increased in 
a greater ratio than between 1860 and 1880. Here are the 
percentages of increase as compiled by Mr. Philpott of 
Iowa, from the census reports. It shows the exact per- 
centage of increase between 1850-60 in the first column, 
and the percentage of increase for each of the ten years 
between 1860-80: 



Lines or Progress. 




Average each 

Ten Years — 

1860-80. 



Population, 

Wealth, 

Foreign commerce, aggregate, ........ 

Foreign commerce, per capita, , 

Railroads, aggregate, 

Railroads, per capita, 

Capital in manufactures, 

Wages in manufactures, aggregate, 

Wages in manufactures, per hand, 

Products, 

Value of farms 

Farm tools and machinery, 

Live stock on farms, 



26.3 
61.0 
45.6 
15.3 
69.0 
34.0 
66.0 
58.3 
9.4 
69.6 
23.6 
27.7 
17.3 



518 DOES PROTECTION RAISE PRICES ? 

Every laboring man can here see for himself whetlier pro- 
teiction increases wages or not. Between 1850-60 the wages 
per hand increased seventeen and three-tenths per cent., 
while between 1860-80 they increased only nine and one- 
fourth per cent. Under a low tariff they increased nearly 
twice the ratio as under a high tariff, and between 1870-80 
wages per capita actually decreased. Under a low tariff 
manufacturers increased ninety per cent., while under a high 
protective tariff they increased only sixty-six per cent. 
Free-traders maintain that protection falls most heavily 
on the farmer. Look at the above table. Under a low 
tariff the value of farms increased one hundred and three 
per cent., while under a high protective tariff it increased 
only twenty-three and six-tenths per cent. Under a " tariff 
for revenue only " the live stock on farms increased one hun- 
dred per cent. — exactly doubled — while under a high pro- 
tective tariff it only increased seventeen and three -tenths per 
cent., or about one-sixth. 

Protectionists call free-traders ''theorists," "dreamers." 
Well, the above figures and facts taken from the census re- 
ports are not "theories" or "dreams." They are solid, un- 
deniable facts. And every protectionist who tries to per- 
suade a laboring man that protection raises wages, should 
first explain the above facts. 

HOW PROTECTION LOWERS WAGES. 

When a workingman hears a man talk about free trade, 
he always asks the question, "Won't free trade lower 
wages ? " That is a practical question. Every intelligent 
free-trader will answer at once, " Free trade will not lower 
wages. On the contrary protection lowers wages." Now 
it is easy enough to make this answer, but it is some- 
times hard to prove it. Sometimes a workingman wants to 
see the "figures." He wants to have it shown to him in 
black and white. Fortunately the figures can be given. The 



519 



statistics which show that protection does not raise wages, 
are within the reach of every man. Every workingman can 
satisfy himself that any slight advance he may receive in his 
nominal wages, is more than eaten iip by the increased cost 
of living. 

If there is one State in the Union that should be benefited 
by protection, that State is Massachusetts. It is full of pro- 
tection and always has been. If protection raises wages 
anywhere it ought to in Massachusetts; but does it? 
Hon. Carroll D. Wright, labor commissioner of Massa- 
chusetts, a Republican, a State official and a protectionist, 
gives the condition of the laboring men in 1881 as compared 
with 1860. He gives the wages in 1860 and in 1881, and 
also gives the cost of living in 1860 and 1881. This is the 
conclusion he comes to in his own words: 

" Covering the whole period of twenty-one years^ there was an 
average increase in wages of 31.2 per cent, and in prices 41.3 
per cent. That is, hetween 1860 and 1881, the workingman has 
suffered a reduction of ten per cent, in the purchasing power of 
his wages, and this hetween a dead level year and one of general 
prosperity.''^ 

Workingmen can see from the above how protection raises 
wages. It does appear to raise wages. The workingman 
gets more money for his work, but it is exactly as free-traders 
say, it costs him so much more to live that the additional 
money received is more than eaten up. Wages go up a Httle, 
but cost of living goes up more. 



620 



DOES PROTECTION RAISE PRICES? 



*WHAT ONE DOLLAR COULD BUY IN 



1860. 1872. 1878. 1881 



Flour, superfine, pounds, 

Codfish, " 

Beans, ... " 

Coffee, " 

Sugar, " 

Soap, " 

Beef, roasting, " 

" soup, 

" corned, " 

Veal, hindquarters, " 

Mutton, forequarters, ** 

Hams, " 

Potatoes, bushels, 

Milk, quarts, . 

Coal pounds. 

Shirting, 4-4, yards,. . 

Sheeting, " 

Rent, four room tenement, . days,. . . 

Board, men, " ... 

" women, " ... 



25.64 

18.87 

12.66 

4.36 

9.70 

11.49 

9.18 

20.83 

15.38 

9.18 

13.51 

7.75 

1.67 

21.27 

312.00 

10.87 

9.34 

6.75 

2.51 

3.92 



18.18 

12.20 

10.52 

2.35 

8.33 

12.50 

5.26 

13.33 

9.52 

5.85 

9.80 

7.41 

0.97 

12.50 

217.00 

7.69 

7.14 

2.03 

1.24 

1.87 



22.72 

16.67 

12.05 

3.77 

10.00 

12.34 

6.94 

18.86 

12.34 

6.53 

9.70 

8.07 

1.03 

18.86 

310.00 

13.33 

11.11 

5.40 

1.67 

2.63 



19.76 

13.33 
7.54 
3.47 
9.09 

14.81 
5.88 

18.18 
9.75 
6.34 
8.82 
6.55 
0.79 

16.66 
255.00 

11.42 
9.30 
3.75 
1.47 
2.33 



*This Table was inserted by the compiler and taken from J, Schoenbof's 
\York entitled The Destructive Injimnce of the Tariff. Published by G. P. 
futnam's Sons, N. Y. 



CHAPTER XL. 

COMPAEING AMERICAN WAGES WITH ENGLISH 
WAGES, AND SHOWING HOW SMALL THE DIF- 
FERENCE IN THE PAY, AND HOW SMALL A 
TARIFF WOULD BE NEEDED TO 'PROTECT 
AMERICAN LABOR, IF RAW MATERIALS WERE 
FREE.* 



THE superiority of our means of production being 
acknowledged, but Uttle remains to be said to demon- 
strate that our industries need no protection to enable them 
to compete successfully with Europe, provided they share 
the advantages that Europe, — i. e., England, Germany, 
etc., — possesses; namely, free raw materials. Our exports 
in cotton goods are sufficient evidence of this. The same 
may be said of articles where the skill of the workman, the 
inventive genius of the American, comes into action. In 
fact, wherever the value of the work bears a very high rela- 
tion to the value of the raw material, there we can freely 
compete with foreign nations. It is so in the case of 
machinery, tools, implements of all sorts made of iron and 
steel. Though they are made of materials taxed more 
heavily than the finished goods, yet the superiority of 
American workmanship is able to overcome these burdens. 
A¥herever labor largely preponderates in the combined value 
of labor and materials, there we excel. Of coui-se, in 
heavy goods, requiring little skill and labor, whose value 

* J. Schoenhof in TJie Destructive Influence of the Tariff upon Manufacture and 
Commerce. G. P. Putnam's Sons, New York. 

(521) 



522 



AMERICAN AND ENGLISH WAGES. 



lies chiefly in the material, competition is altogether out of 
the question. This alone ought to prove conclusively that 
though we pay in most fields better wages than even the 
English — and they pay the highest wages in Europe, — 
we still make goods that can fully compete with theirs. 

"We may consider, therefore, a protective tariff, such as we 
enjoy, as an absolute superfluity that does not benefit the 
workingman (on the contrary, does him harm in lessening 
the value of his wages), cripples the manufacturer in nar- 
rowing his field of operation, and most completely annihi- 
lates our foreign commerce. And manufacturers cannot 
prosper without the aid of commerce. 

Some people, however, after all that has been said of the 
relative cheapness of our work, may still be in doubt as far as 
our competitive capacity in regard to England in concerned; 
— the country which in Europe pays the highest wages and 
makes the cheapest goods. To dispel such doubts I will 
compare the rates paid here with those paid in Europe in 
the principal industries: 

1. Cotton Goods — Mr. Carroll D. "Wright states the 
average weekly wages in Lancashire and Manchester: 





Lancashire. 


Massachusetts. 


Difference. 


Of weavers, 


15.28 
7.80 


$5.64 
10.09 


$0.36 
2.29 


Of mule spinners, 








$13.08 


$15.73 


$2.65 



Considering this to be a fair average of differences paid to 
the various employees of the cotton mills in the respective 
countries, then we pay our operatives just twenty per cent, 
more than the English pay. And the English pay about 
fifty per cent, more than the Germans pay their operatives, 



AMERICAN AND ENGLISH WAGES. 523 

and yet we are exporters of cotton goods to both. Germany * 
and England. The figures of Mr. Wright find contradiction 
from various quarters. Mr. J. Chase, member of Congress 
from Rhode Island, himself a cotton manufacturer, places 
the difference as liigli as sixty-two per cent. 

According to the last census, however, the average wages 
for all cotton mill-hands are $246 for the year, or $4.73 a 
week, f which would imply earnings below those given by 
Mr. Wright. It is doubted whether our cotton-goods opera- 
tives can earn more than the English. Granting, however, 
for argument's sake, that they earn twenty-five per cent, 
more, then this surplus of earnings is more than balanced 
by longer working hours — sixty hours constituting a week 
in Massachusetts (other States, havii^' no legal limitation, 
work longer hours yet), against fifty-four to fifty-six hours 
in England, and by higher speed and greater perfection of 
our productive methods. But let us waive all the advant- 
ages derived from these points and take twenty per cent, as 
representing the proportion of wages to the product of the 
cotton mills, then a tariff of five per cent, on cotton piece- 
goods would cover the whole difference in the earnings of 
our operatives. The old tariff taxed cotton goods thirty- 
five per cent, where ad valorem rates were imposed. The 
new tariff raised this to forty per cent.]; Specific rates 
were reduced somewhat, but not sufficiently to compensate 
for the great decline in the price of cotton that has taken 
place since 1865. Unbleached, from five cents to four cents 
per square yard ! Bleached, from five and one-half to five 

* This we are able to do, notwithstanding Germany's tariff of forty marks or 
ten dollars on the hundred-weight of cotton goods. One hundred pounds Ger- 
man weight equals one hundred and ten pounds American. 

t Where the annual average of earnings in any specified industry is given, it 
must be borne in mind, that this includes high and low wages, salaries of clerks, 
etc., which reduces the individual earnings of the largest proportion of workers 
to a sum materially below the average. 

$ This includes cotton velvets, embroideries, laces, etc., which are all raised 
from thirty-five to forty per cent. 



524 AMEEICAN AND ENGLISH WAGES. 

cents 1 on goods counting over two hundred threads to the 
square inch. These comprise all fine goods such as nain- 
sooks, mulls, lawns, etc., which are largely used by Ameri- 
can manufacturers of lace goods and trimmings, who in 
most instances have to pay more for duties on their mate- 
rials than on the finished goods of their respective branches. 
2. Iron and Steel — (a) Pig-iron, Mr. Joseph D. Weeks 
of Pittsburgh, one of our best experts, gives the price paid 
for labor in Pittsburgh to make a ton of pig-iron: 

Labor on mining ore for one ton of pig-iron, @ |1.40, = $2.38 
Labor on mining coal and making coke necessary for 

ton of pig-iron, . . . . . .1.25 

Labor on limestone,. . . . . . .30 

Labor at furnace, . . . . . .1.25 



15.18 

In Cleveland, England, $3.17 is paid, against $5.18 in 
Pittsburgh. This leaves $2.01 more pay for all the work- 
ingmen that are employed in raising the ore, the coal, and 
the limestone, and making the iron. To offset this, in addi- 
tion to the transportation expenses, commission charges, 
etc., of from $5 to $6 on a ton of pig-iron, the tariff gives 
$6.72, which is a total of $12 to $13 protection. The 
ruling price in England of pig-iron was last year, 1882, 
485. to 505., or say, in round figures, $12; the price of 
American pig No. 1 about $25. Now the price for Cleve- 
land (English) pig is 405. to 435. For American pig in 
Pittsburgh $18 to $20 for No. 2, and $21 to $22 for No. 1. 
(h) Steel rails and other steel, bars, rods, etc.: Product, 
983,039 tons, at an outlay for wages of $4,930,009, or 
$5.01-|- for each ton produced. This is what the American 
workingman gets. Protection on rails now $17, against 
the former, $28. According to Leone Levi, the English 
statistician, and Mr. Edward Young, the former Chief of 
our Bureau of Statistics, the average wages in Enghsh steel 



AMERICAN AND ENGLISH WAGES. 625 

works were about 325. or about $8 a week for skilled labor, 
or $1.35 a day, and 2l5. a week for unskilled labor, or 87 
cents a day. This gives the American steel-worker seventy- 
three per cent, more than his English brother gets. This, 
however, is offset, as shown before, by our better and 
quicker methods of manufacture. But granting, for argu- 
ment's sake, even fifty per cent, more as cost of labor in this 
country, then this would add to the cost of a ton of Ameri- 
can steel the magnificent sum of $1.67 for wages as against 
$28 or $17, respectively, of protection for the mill-owners. 
Protection that is granted by freight and other charges on 
the imported stuff ought not to be lost sight of in this 
instance either. 

"3. Leather — upper leather and calfskin manufacture — 
Tanners' wages — Eastern and "Western cities of the United 
States, $10 to $11 per week. Curriers' wages — Eastern and 
Western cities of the United States, $14 to $15 per week. 
In country towns of the United States, $2 to $3 a week 
less. Morocco leather — Tanners' wages — New York, $12 a 
week; Philadelphia, $12 a week; Wilmington, Del., $10 a 
week; Lynn, Mass., $10 a week. 

'< Morocco finishing by machinery — Wages of finishers — 
New York, $13 to $14 per week; Philadelphia, $13 to $14 
per week; Lynn, Mass., $11 to $12 per week. 

" Sole-leather tanners — In the country towns of the United 
States, $1.25 per day; in Philadelphia, Baltimore, Louis- 
ville, Cincinnati, and Chicago, $9 to $10.50 per week, ten 
hours a day; in London, England, $8.50 to $9.50 per week, 
nine hours a day's work; in the country towns of England 
and in Scotland, $6. a week, nine hours a day's work; in 
Germany, 80 cents to $1 a day, ten hours a day's work; in 
French provinces, $5 to $5.50 a week; in Paris (France), 
$1 a day. 

"Sole-leather curriers — In country towns of the United 
States, $1.50 to $1.60 a day, ten hours a day; in London, 



626 AMERICAN AND ENGLISH WAGES. 

England, $10 to $13 a week, nine hours a day; in the coun- 
try towns of England and in Scotland, $7 to $7.50 a week; 
in Leeds, England, East India tanned skins, $6.50 to $7.50 
a week; in Germany, $1 to $1.15 a day, ten hours a day; 
in the provinces of France, $5 to $6 a week; in Paris, $9 a 
week." 

The above is an abstract of a report made by the SJioe 
and Leather Reporter to Mr. Nimmo. The correctness of the 
list is confirmed by twelve business firms in the line. It 
will be seen that the wages, considerably higher than in 
Germany and France, are not much above the average wages 
paid in England: for tanning say twelve and a half per 
cent. ; while curriers get about thirty per cent. more. As 
the American, however, has ten working hours against the 
Englishman's nine hours, the surplus added to the cost of 
production on account of higher wages is reduced in tanning 
to a minimum — less than five per cent. ; in currying to about 
fifteen per cent. 

As wages determine only a correspondingly small part of 
the value of the whole product, it is evident that this indus- 
try can afford to do without the paternal care of the Gov- 
ernment. We are heavy exporters of leather. Hides are 
not protected. The lord of the prairie, the aristocratic ox, 
under a democratic form of government does not enjoy the 
protection that is extended to his plebeian cousin, the sheep. 

4. Silk goods — The difference in wages varies largely 
between the different European countries — England, Ger- 
many, France, and Switzerland. A statement of wages 
and earnings would give a very inadequate idea. The vari- 
ous modes of operation have to be taken into consideration. 
The greater efficiency of the workers, and the application of 
most improved machinery, to a large extent obliterate' the 
influence of higher earnings on cost of product. Ameri- 
cans earn from sixty-five to seventy-five per cent, more than 
the English; perhaps one hundred per cent, more than Ger- 



AMERICAN AND ENGLISH WAGES. 527 



man operatives. Tlie acknowledged superiority of our 
working methods reduces the difference materially; fifty per 
cent., as an addition of cost, would be a very high estimate. 
Many of our silks are produced in New Jersey, whose pro- 
duct in 1880 was $13,850,000 (cost); of this there was paid 
in wages $4,177,000, or thirty per cent.; fifty per cent, of 
thirty per cent, is equal to fifteen per cent All the protec- 
tion needed to protect the workingman is fifteen per cent. 
A tariff of fifty per cent, is certainly excessive, in view of 
the enjoyment of free raw silk. A tariff of thirty per 
cent., with free materials, would give ample protection to 
the silk manufacturer. It is doubtful whether the present 
rate of protection amounts to much more than that, consid- 
ering the latitude, under- valuation, and smuggling enjoyed 
under the former tariff. The reduction to fifty per cent, 
still gives ample opportunities for these practices. 

5. Woolens — From the report of the United States 
Consul at Leeds the following may be taken as ruling prices 
in 1878, the week having fifty -four working-hours against 
not less than sixty hours in America: 

Wool-sorters per week, . 
Scourers and dyers per week, 
Spinners per week, . 
Weavers, men, per week, 
Weavers, women, per week, 
Pressers per week, . 
Laborers per week, . 

Considering the difference in time, I doubt wnether our 
woolen mills pay much more in wages for a given piece of 
work than the English. $4.50 to $6.00 for women and 
$6.00 to $9.00 for men are fair average wages of operatives 
in American woolen mills. Still we have a specific and an 
ad valorem duty to pay on woolens, averaging fully sixty per 
cent, even after the reduction. 

Now, I ask any candid manufacturer whether his '' in- 





. $6.24 to $6.73 




4.80 to 5.75 




7.70 to 9.69 




6.00 to 8.40 




3.60 to 4.80 




5.75 to 6.72 




4.32 to 5.25 



628 AMERICAN AND ENGLISH WAGES. 

fant " industry would not be fully protected with a tariff of 
twenty- five per cent., plain and simple, if he had wool and 
other raw materials free of duty? With free raw materials 
he could build up an export trade and thereby give more 
steady employment to his help. 

6. Coal, anthracite — In 1880 we mined 27,433,000 tons, 
and paid in wages $21,680,000, or seventy -nine cents a ton. 

Coal, bituminous — Product, 40,311,000 tons; wages, $30,- 
707,000, or seventy -six cents on the average a ton, Pennsyl- 
yania producing 18,000,000 tons, at a cost of only sixty- four 
cents a ton for wages. 

I leave the intelligent reader to determine for himself 
whether a protective tariff of seventy-five cents is required 
to secure to the working-man sixty-four cents in wages. 

We have turned a page in our history. We have become 
a great manufacturing nation. The narrow confines in 
which the tariff encircles us must give way before the all- 
over-powering energy of a young nation. A thorough 
revision of the tariff upon the basis of free raw materials 
has become an urgent necessity for the preservation of our 
vast manufacturing industries. 



A. 



r,rc 1133 



